Bloomberg Businessweek reports
Yelp Inc., a website that collects local business reviews, is scaling back its year-old deal service, following Facebook Inc.’s retreat from a market where consumers and merchants say they’re becoming inundated.
Yelp will cut its sales staff dedicated to Yelp Deals by half, the company said yesterday. Facebook, the world’s largest social network, said on Aug. 26 it would shut down its Deals local-discount feature, decamping from a business it entered in April. Both services were started to compete with Groupon Inc.
While calling for the end of the deal space is not warranted, it certainly is getting to be that time that an examination of the health and scalable viability of the space are fair game. Facebook has gotten out of the space for now. Groupon is, well, Groupon so according to them the deal space is full of butterflies of gold and unicorns that poop rainbows. I guess if you are being quiet before an IPO (I guess Groupon cut a deal with Webster’s to redefine quiet to fit their needs, huh?) what else can you do?
Over at paidContent.org there are some other thoughts about the space:
The reason given by Yelp for the change in strategy is that the company now wants to focus on “good” opportunities, rather than sending out more offers of “inherently declining quality.”
The decision comes somewhat abruptly: it was only at the end of June that the company took the service mobile and extended its Deals service to its iPhone and Android devices, allowing users to find and redeem the offers through Yelp’s native apps.
“Today you can find Yelp Deals in your inbox in 20 metros and counting,” wrote Eric Singley, Yelp’s director of mobile products, at the time. “How’s it going? AWESOME.”
So what causes something that was so “Awesome” in June to be shelved in August? Well, good ol’ fashioned hype versus reality always has a hand in this. If we are smart as both industry members and consumers it’s best to think that any self-promotion that reeks of hyperbole (which is most of it) should simply be discarded as the crap that it is. After the self-generated hoopla passes we can then assess that nasty little thing called reality to see where it all settles in. Despite this being the Internet space things still need to time for facts to be found. Words, especially in this space, are as cheap as dirt.
It is likely that the deal burnout that many are experiencing can be a contributing factor. What adds to the weariness with the volume of the deals is the quality of the deals. Yelp is looking to focus on “good” opportunities. Well, if they only need half the staff to get the “good” deals that implies that the other of your deals before now were of “inherently declining quality”. When an Internet company shifts into consecutive multi-syllable words to describe a situation and it they are not followed by an exclamation point then you know something is amiss. It’s also likely that they hired someone to write it since it’s using full words.
So where does it go from here? The Groupon folks are probably in a big room right now with a video of Andrew Mason saying over and over “This is a good thing for us. They can’t handle the truth!”. This wave of negativity about the business opportunity for deals from well established Internet players is certainly making the deal space look like a deal for day old bread rather than something fresh and exciting. Of course, if your life is nothing but spa visits, pedicures and photo shoots then there is plenty to look forward to.
In the end, all we are experiencing is the Internet’s version of the Sunday paper’s ads. When there is too much to wade through people lose interest. And, maybe even more importantly, when you are putting a piece of crap in a 50% off box with a pretty bow on it, guess what you still get when you open? Yup, that’s right.