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444 Part Three Key System Applications for the Digital Age

In the year following the acquisition, Google Yelp’s strategy is to sell local advertisements wher-
and Zagat worked together to allow Zagat reviews ever businesses exist and to provide free content
to appear alongside Google searches on various funded by these sales. Yelp has also relied more on
platforms. Google wanted to use Zagat’s customer individual reviewers. Instead of distilling reviews
generated guide format and apply it to any place into one coherent whole, as Zagat’s does, Yelp allows
that can be searched for: restaurants, retail outlets, its reviewers to post full, unaltered reviews, which
nightlife, hotels, resorts, spas, golf courses, and allows top reviewers to gain followings and even
more. A growing percentage of Google searches are receive invitations to special events. The drawback
for information on nearby locations—20 percent of of this approach is that many reviews are far longer
all searches, and 40 percent of that subset are made than necessary and individual reviews may contain
using mobile phones. distortions or false claims designed to damage
In May 2012, Google formally announced the reputations. Zagat reviews give a clearer and more
inclusion of Zagat guides and online reviews in concise impression of a restaurant than most Yelp
its new service, Google+ Local. With this service, reviews, and they are aggregated and given a score.
Google hopes to more effectively compete with Yelp Investors believe that Yelp is on “a different
in local search. Because Google values eyeballs over trajectory” because of its unique business model.
all else, the company opted to remove the pay wall Zagat sold content to consumers and corporations;
from Zagat content for the first time. Zagat had been Yelp sells advertising to local businesses. Many
charging $25 per year or $5 per month for access to analysts believe there is much more potential for
its online reviews. Zagat will still charge $10 a year growth with Yelp’s business model than with Zagat’s
to use its iPhone app, and after a free six-month trial, old model because it is a useful advertising vehicle
it will charge $25 annually to see reviews on devices for small businesses everywhere, not just major cit-
running Android. Still, normal Google searches on ies. Zagat may also have hurt itself with its slow
the Web will feature Zagat content for free, and response to the emergence of the mobile digital
Google is considering dropping the other subscrip- platform.
tion fees for mobile devices. Most analysts agree that Zagat could have avoided
Google hopes to combine Zagat reviews with its this state of affairs by making a more aggressive effort
mapping technology to better compete with Yelp. to go digital. The choice to use a pay wall may be
Trying out both services highlights some of the dif- the biggest culprit. But did it necessarily hurt Zagat’s
ferences between them. Zagat.com’s home page is bottom line? The company has always been profitable,
streamlined, with a minimal number of search boxes according to Tim and Nina Zagat. Other successful
and links immediately available. Restaurant reviews Web sites have used a pay wall. Zagat book revenue
are organized by several major “hub” cities as well is still strong—the New York survey is still on the
as popular lists of the top restaurants of a certain New York nonfiction best-seller list, and its corporate
type. Clicking on a restaurant shows visitors a por- custom guide unit is very profitable. Despite their
tion of the data Zagat maintains on that restaurant. acquisition by Google, the Zagats plan to continue to
For example, the site now shows the percentage of publish their physical books. Nevertheless, it’s also
users that “like” the restaurant, and several featured possible that going with a pay wall before establishing
reviews. Many more reviews of the restaurant are a loyal online audience may not be the right time to
available if the user wants to keep scrolling. make the move towards a paid model.
Yelp’s front page is much busier and less stream- So far, the pairing of Google and Zagat has been
lined than Zagat’s, but has a great deal more content successful, and will allow the two companies to
available immediately. The front page has lists of better compete with Yelp in local search. But Google
the most popular restaurants, retail outlets, bars and also hopes that incorporating Zagat’s user-generated
clubs, and many other categories, all free to the user. content model into Google+ will help its fledgling
Looking for a dentist in New York City? Yelp has social network to better compete with Facebook
reviews of doctors and dentists that include videos by providing uniquely valuable services to its
put together by the practices to give visitors more users. Google envisions Google+ users searching
information. Like Zagat.com, Yelp’s reviews are orga- for “pizza”, and being given a map with the closest
nized into a similar list of larger cities, but reviews pizzerias marked with Zagat reviews, some of which
exist for almost any location you can think of, includ- may be written by their friends on the network. For
ing less prominent cities and towns. Google is also Google, acquiring Zagat was just one of a myriad
working towards the goal of ubiquity. of acquisitions they made in 2011; but from Zagat’s

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