America’s digital advertising market to expand 19% in 2019
Advertising is Yelp’s bread and butter. Advertising dollars are shifting from traditional media such as television, newspaper, and radio to online, which is good news for Yelp. For example, eMarketer data shows that spending on television commercials in the United States will drop 2.2% this year to $70.8 billion. In contrast, digital ad spending in the country is forecast to grow 19% to $129.3 billion, a huge revenue opportunity for Yelp in the US in 2019.
Yelp’s advertising revenue increased 6.0% YoY to $227 million in the first quarter with advertising contributing 96% of its total revenue in the quarter. Advertising contributed 99% of revenue at Facebook (FB), 86% of revenue at Twitter (TWTR), and 85% of revenue at Google parent Alphabet (GOOGL) in the first quarter. Yandex (YNDX) derived 72% of its revenue from advertising in the first quarter.
Yelp lags in advertising revenue growth rate
Of these companies, Yelp recorded the slowest increase in advertising revenue in the first quarter. Yelp’s 6.0% YoY increase in advertising revenue in the first quarter compared to a 26% YoY increase at Facebook and an 18% YoY increase at Twitter and Yandex each. Advertising revenue increased 15.4% YoY at Alphabet in the first quarter. Alphabet’s advertising revenue flows through its Google unit.
As Yelp adds more features to its review site and its audience grows, the company is able to attract more advertisers to its platform, thus enabling it to capture more advertising dollars.