Yelp released its first-quarter earnings report in late April 2015 which showed its share price going downward. On its previous earnings call, Yelp had talked about its plan to increase sales headcount by 40% this year with growth coming mostly in the U.S. COO Director Geoff Donaker said many of the sales professionals were actually college pass-outs or within a few years thereafter. Yelp’s sales headcount in the first quarter grew roughly 25% year-over-year.
Later, CFO Rob Krolik said they implemented a territory change within their sales organization at the beginning of 2015 with the aim to reach out to more local businesses. However, their plan had a negative impact on sales productivity. They soon reversed the plan in March and even productivity began to recover. Rob Krolik said Yelp plans to grow its sales team focused more on national, mid-market, and franchise businesses.
COO Director Donaker further explained that every year for the last five or six years, Yelp reallocated territories at the beginning of that particular year. Only this year for the first time ever, they didn’t take geography into consideration since they wanted to ensure the sales team got leads more quickly. They soon found geography to be important than they thought.
Moreover, the company’s brand advertising revenue was down 11% year-over-year. The reason is the shift to programmatic advertising. To note, 40% of Yelp’s local advertising revenues in Q1 came from CPC advertisers, which was up from 32% in Q4 in 2014.
CEO Jeremy Stoppelman said they have shifted to performance-based advertising and it is still relatively early in the development of Yelp’s CPC product.