Academic Study Shows that Yelp Ads Lead to Large Gains for Business Owners

Last week, Michael Luca, professor at Harvard Business School, and Weijia Dai, professor at Lehigh University, released the results of a large-scale experiment which analyzed the effectiveness of paid search advertising for restaurants on Yelp. The experiment found that advertising increases consumer discovery and engagement with businesses, and ultimately, that Yelp ads can be a good investment for restaurants.

The study examined 18,000 restaurants over a three-month period. Researchers randomly assigned paid search advertising packages to 7,000 restaurants that had not previously advertised on Yelp, and compared their performance with the restaurants that did not receive the advertising packages during the course of the experiment. The study found that:

• Advertising increased the number of Yelpers that visit a restaurant’s Yelp page by 25% on average, with mobile page views increasing 30%

• Advertising increased the number of purchase intentions:

• Generating directions to the business on Yelp increased 18% on average

• Clicking through to a restaurant’s website from Yelp increased 9% on average

• Calling the restaurant from Yelp increased 13% on average

Every day, millions of consumers visit Yelp when they are deciding where to spend their hard-earned money, and millions of businesses receive customer introductions via Yelp, whether those businesses advertise on Yelp or not. Over one hundred-thousand of those businesses have decided to advertise on Yelp in order to connect with potential customers who might not have discovered them otherwise. This new study from Harvard and Lehigh professors shows that advertising on Yelp not only gives businesses more exposure to potential customers, but also increases consumer engagement with the advertised business, both online and off.

This study explored one business category on Yelp and was conducted blind to the businesses involved; other studies have found similar or greater results.

And remember, money doesn’t buy anything but ads on Yelp.