Back to the future, it is ?
This reminds us of discussions about cannabis advertising as far back as 2016 – 2017.
According to a MM report published this past week Yelp say they made the policy change about cannabis back in February but strangely are telling companies / organisations only now with online updates via twitter that look like this.
The representative did not directly reply to a question about the reasoning for the policy change. Instead, they discussed how Yelp does not “take revenue from cannabis businesses that have not purchased our Verified License product.” (Source Marijuana Moment)
Here’s the intro to the MM report.
Yelp is no longer offering two key advertising features to marijuana-related businesses, the company confirmed to Marijuana Moment.
Two cannabis businesses have shared an email from Yelp announcing the policy change. It states that the company had “unfortunate news” and that it will be removing both the “Business Highlights and Portfolio advertising options for cannabis-related businesses, effective immediately.”
“We will be removing these programs from your Yelp page over the course of the next few business days,” the email continues.
The Berkeley Patients Group (BPG), which is the longest-running cannabis dispensary in the country, told Marijuana Moment on Wednesday that it has already seen a significant impact since receiving the notice two days earlier.
“This is yet another blow for us—amidst a devastating pandemic, no less,” BPG Director of Marketing Lauren Watson said. “Yelp was one of only a few effective advertising channels available to legal cannabis companies, and now, without warning, we’re being shut out. Just two days after the new policy was implemented, we’re seeing over a 60 percent decline in page views.”
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Maybe this has something to do with it?
Yelp co-founder and CEO Jeremy Stoppelman announced in an internal email that the company is going through difficult times. Yelp has to cut expenses, which means a large round of layoffs and some additional measures — 1,000 employees have been laid off.
According to an SEC filing, Yelp had 5,950 employees as of December 31, 2019. Today’s layoffs represent a 17% staff reduction.
The company has shared Stoppelman’s internal email on its website. In addition to layoffs, another 1,100 employees are now on furlough. Those employees are considered on unpaid leave until further notice (with some exceptions) — they will receive two weeks of additional pay and retain their benefits.
Before considering layoffs, Yelp tried to cut costs in different ways. The company has reduced server costs, which makes sense given that traffic has shrunk both on mobile and on the website.
Many projects have been “deprioritized” and executives accepted 20-30% pay cuts. Stoppelman himself won’t take a salary nor vest any stock awards for the remainder of the year.
“The physical distancing measures and shelter-in-place orders, while critical to flatten the curve, have dealt a devastating blow to the local businesses that are core to our mission,” Stoppelman wrote. “Interest in restaurants, our most popular category, has dropped 64% since March 10, and the nightlife category is down 81%. Gyms are down 73%, and salons and other beauty businesses are down 83%.”
Given that Yelp is a service focused on recommending the best local businesses around you, the lockdown has a direct impact on usage. Fewer eyeballs mean shrinking ad revenue as well. A restaurant chain isn’t going to spend money on Yelp ads if it is closed.
The company expects $8 to $10 million in charges due to severance and benefits costs. Yelp shares are trading at $21.74, up 0.46% compared to yesterday’s closing price.
Jeremy Stoppelman’s political donations show him to be on the blue side of politics ( see below) so it’s obviously not a political decison not to take cannabis advertising revenue.
We’ll probably never know but it looks as though lawyers have been advising the company to stand away from cannabis until it is federally regulated.
If we learn more, as always, we’ll update the story.