Yelp Chief Financial Officer David Schwarzbach noted during the company’s earnings call on Thursday that while demand for home-service providers has softened since the middle of the COVID-19 pandemic, companies have been spending more on advertising.
While clicks on the platform for 2022 fell 8% from a year ago, the cost per click rose 27% as companies focused on high-performing ads.
The company drove record advertising revenue from its Services businesses as well as from its sales channels, self-serve and multi-location services.
“While the macro environment remains uncertain, we continue to see significant opportunities in both the long term and the year ahead,” the company wrote in a letter to investors. “Our deep portfolio of initiatives and our proven ability to execute against it give us confidence that we will be able to drive profitable growth in 2023.”
Total advertising revenue rose by 15% year-over-year to a record $1.13 billion, reflecting growth in paying advertising locations and average revenue per location. Paying advertising locations for the year increased by 7% in 2022 compared with 2021.
Company executives believe Yelp also gained market share in services. Year-over-year revenue growth remained consistent in 2022, resulting in a record $694 million of advertising revenue from Services businesses for the year.
Despite softer consumer demand for Services categories in 2022 compared with the prior year, monetization and lead-quality improvement efforts contributed to consistent growth in average revenue per location in these categories, which rose for 10 consecutive quarters.
Advertiser demand was particularly high in the Home Services category, where annual revenue increased by approximately 20% year-over-year and at a compound annual growth rate of nearly 20% from 2019.
Advertising revenue from Restaurants, Retail & Other businesses rose by 17% YoY to $441 million, primarily driven by growth in paying advertising locations. At the same time, the macro environment remained challenging for these businesses in 2022.
Self-serve and Multi-location advertising grew by approximately 25% YoY in 2022. This includes year-over-year growth of approximately 25% for Self-serve and approximately 20% for Multi-location in the fourth quarter.
On the consumer side of our business, demand remained below pre-pandemic levels as consumers visited many types of businesses less frequently. In 2022, app unique devices were flat compared with 2021.
Improving lead quality also became a focus on 2022. The company improved the Request-a-Quote and underlying matching technology to create a more seamless experience.
Yelp launched Request-a-Call, expanded its project-specific search filters, redesigned the Yelp for Business inbox, and introduced a new Projects experience in the Yelp app to help consumers more easily view and manage all of their services projects.