Zagat Trails Yelp But Race Is Not Over
by Greg Shove on September 16, 2008
According to Randall Stross of the the NYTimes last week, Yelp has crushed Zagat.com in the restaurant ratings game, with a fanatical adoption of web 2.0 social media techniques and clever marketing. The audience numbers seems to prove the point: close to 4m monthly unique visitors for Yelp, compared to close to 400,000 for Zagat.com.
For Zagat, this is probably even harder to swallow, since they were using user generated content decades ago to compile their restaurant reviews - not just relying on paid food critics. Stross wants Zagat to embrace some of Yelp’s strategy: comprehensive coverage of all restaurants in a city, as well as always updated ratings, not just annually, as Zagat.com currently does. Makes sense.
But Zagat has attributes that Yelps’ investors probably wouldn’t mind – namely revenue – about $30million annually, as far as I can tell from conversations with people familiar with their business (that was up for sale earlier in the year). And their trusted brand as the definitive guide on where to eat across the country. But of course, protecting the offline revenue and brand has made it harder for Zagats’ owners to embrace the free-wheeling world of web 2.0.
It will not get any easier. Replacing high-value print readership with web readership that drives lower revenue causes heartburn. Just ask any newspaper. But I think becoming more like a media company is the way ahead for Zagat.com – a million monthly readers that are affluent and well-traveled will be more valuable to advertisers than 5 million “yelpers” looking for a local pizza joint or bike store.
So I am not ready to call time on Zagat.com. But it is probably time for them to offer comprehensive coverage at no cost to the consumer – which should drive audience. And then both subscription revenue (not for access to reviews but access to new services, like getting into hot restaurants) and branded advertising revenue can take hold at the same time.
And both Yelp and Zagat need to keep pushing ahead with new features – otherwise consumers will find alternatives, like UrbanSpoon, a new restaurant review site that I have started to use. New brands can be built quickly online, and consumers will switch based on what search result Google serves up.
Different markets, its not impossible for more than one company to exist in a space. It happens offline, is it impossible that it can happen online as well?
Jippidy.com – Video Yellow Pages