Facebook Places: The Real Target Is Yelp

The social network’s new location app will try to get local retail businesses and advertisers to sign up for Places pages
By Mathew Ingram


Most of the attention paid to Facebook Places, the new location feature that the social network launched on Thursday, has focused either on the privacy implications of the service or on the impact it could have on location-based startups such as Foursquare (which some have said they expect to be “crushed” by the new feature). Facebook’s real focus with this launch, however, isn’t individual users or even Foursquare: Instead, it sees Places as a way into the local business and local advertising markets, and the company with the target painted on its back is Yelp.

We’re hearing that Facebook is pouring resources into pitching the Places feature as a tool for local businesses in dozens of markets, by approaching individual store owners and business people and selling them on the idea of setting up a Places page for their location. According to Facebook’s description of the new feature, anyone can create a page for a place, but businesses can “claim” their page by responding to a phone call from a Facebook representative or by uploading some kind of official documentation that proves they have the right to that location.

Yelp, whose service is also based on giving businesses a place to view and respond to feedback from customers, has a similar claim process.Like Foursquare and Gowalla, Yelp was described Thursday as a “launch partner” for Facebook Places, presumably to show that the service isn’t designed to compete with these other services but will be able to incorporate their check-ins and other information via the Facebook Places API.(Another location startup, Hot Potato, today officially confirmed earlier reports that it has been acquired by Facebook.)

Will Yelp Lose Its Lead?

By targeting local businesses and advertisers and trying to get them signed up for Places pages, Facebook is clearly going after Yelp’s bread and butter. Yelp, which launched a “check-in” feature earlier this year in an attempt to compete with Foursquare and other location-based apps, recently said the company has more than 10 million reviews in its database and gets 30 million visitors a month.(Yelp also announced a deal earlier this year with Elevation Partners for up to $100 million in funding.) That definitely gives it a head start, but Facebook has more than 500 million users and is still growing.

Not only that, Facebook already has a relationship with businesses and advertisers: more than 1 million local businesses have already created Facebook pages (what used to be called “fan pages”) for their companies, services, and brands, both to offer information to users or potential customers and to interact with those customers in a single place.That represents—to some extent, at least—a potentially captive market for the new Places feature, which adds location-specific functions to what was just a marketing channel (Facebook’s advertising revenue is expected to reach $1.2 billion this year). Its guide for businesses says:

“Places creates a presence for your business’s physical store locations—encouraging your customers to share that they’ve visited your business by ‘checking in’ to your Place. When your customer checks into your Place, these check-in stories can generate powerful, organic impressions in friends’ News Feeds, extending your brand’s reach to new customers.”

Yelp isn’t the only one threatened by Facebook’s move. Google also has a Places service that is designed to appeal to small and midsize businesses. It was originally called Places Pages and allowed companies either to set up or to claim a page related to their business, but the search giant recently renamed it Google Places.According to the company, more than 4 million businesses have added their pages and information to the service.One of the features of Google’s offering is that retailers in certain cities can request a free photo shoot for their business, and the search company will send a photographer to take snapshots of their location to be added to their Places page.

Whether Facebook can transfer some of its existing clout with businesses to a location-based one that appeals to advertisers and small to midsize businesses remains to be seen, but the social network is clearly betting on that to be a major contributor to its future growth.

Article Source:  Bloomberg Business Week


4 Comments (+add yours?)

  1. cherryching
    Sep 03, 2010 @ 17:35:29

    Facebook is one of the most popular online social networks around the world. It has more than 500 million users and the number is still growing. I am a Facebook user and used to check the page at least twice a day. I like communicating with friends and family through Facebook, especially for those who are overseas. I check the news feed everyday to keep in touch with them. The reason that I like Facebook is the diversity of applications that include games, photos, instant chat, events etc.

    Referring to the article, Facebook would like to take over the Yelp’s customers by launching a new application called Facebook Places. In my opinion, Facebook has the strength of well-developed brand and popularity. New application must catch the public attention. However, Yelp is a strong competitor who has a large database and 30 million visitors per month. They are recently partnered with Elevation to generate $100 million fund in respect to further development. As a result, it is not easy for Facebook to take over Yelp’s customers by providing similar features. To sum up, I support Facebook to launch Facebook Places because Yelp is only sharing the store information within US. Facebook Places is more international.


  2. Peyton Ho
    Sep 03, 2010 @ 21:09:57

    um, after partnering with businesses and advertisers, seems Facebook is aiming another new market, the regional city guide, mostly guide of restaurant, mall, bar and fun places.
    I think Facebook is very impressive and innovative, always trying to expend their capacity and capability.
    If Facebook offers the similar function as Yelp does, the beneficiary will be the facebook users, that’s will be fantastic! Then I won’t be opening lots of pages trying to find restaurant information. I think they will continue offering more and more functions in order to cope with fussy and fickle customers.


  3. dshawnb
    Sep 04, 2010 @ 17:45:43

    Internet should not be limited by a country’s border, with the two Facebook and Yelp, both are well-known and highly recognised, the most distinct difference is the website functionality coverage, as we all know and aware that Facebook is worldwide used and launched, not only limited by its origin, and that’s why and part of the reason how Facebook grown and spread. Although both company have large amount of users, but it has been differently targeted, and for Facebook to go across the area will not be easy, due to the nature of the website and the experience that both website have.


  4. cacbeer
    Sep 06, 2010 @ 00:13:55

    I indeed that Facebook is very popular social network. It is the place where I can keep in touch with friend or family and share some picture or feeling, or even new and situation that happen to my friend. My friend can even sell their products or advertise about their shop via Facebook ! This simple yet sophisticate website can do various activities with their huge number of application provided. With this new application called “Facebook place” is might be the next things that make we love facebook more. The time will show if is success or not.


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