By Mary Bowling, ClickZ, May 7, 2009

If you search for a local business on Google, Yahoo, or MSN, in one of the bigger cities in the United States, chances are excellent that a Yelp page or two will appear on the first page of the search results. Yelp ranks well in the big three search engines for local categories, including things like movies, nightclubs, massages, restaurants, oil changes, and much more.

Yelp is growing faster than Citysearch. Its monthly unique visitors have more than doubled in the past year and topped 20 million in February 2009. So what exactly is Yelp?

Yelp’s tagline, “Real Reviews, Real People,” explains it in a nutshell. It’s a Web site that originated in 2004 in the San Francisco Bay area where users are encouraged to leave their opinions about local businesses and events. Current estimates give Yelp credit for publishing over five million online reviews.

Yelp Reviewers

Since its beginning, Yelp has rewarded frequent and entertaining reviewers for their efforts. They sometimes throw parties for Yelpers and their guests, like the Yelpapalooza being held this week in Denver, with DJs, live local bands, free food, and drinks. Other events and perks are available to power reviewers. In Yelp’s own words, they reward their most active and influential members with status in a club called the Yelp Elite Squad.

Elite-worthiness is based on a number of things, some of which include well-written and personal reviews of local businesses and services, being accountable for those reviews (use of a real name and photo, etc.), creating useful lists, voting on reviews and complimenting other yelpers, and good citizenship on Yelp Talk.

Reviews by active participants in this online community receive greater prominence on the site and more weight in the algorithm. The reasoning is that the opinions of people who put themselves out there by proving that they are real people and not anonymous critics deserve more attention that those of one-time reviewers.

Many contributors are entertaining writers whose jabber appeals to the crowd. They tend to create lists identifying the best and worst businesses in certain categories of the cities they cover. They often participate in Yelp Talk, the site’s forum for asking and answering questions, sharing information among members, and socializing online. Elite Squad members tend to have a wide network of friends who value their opinions and some are so popular that hundreds of readers subscribe to their reviews. A thumbs up or thumbs down by a local influencer can go a long way toward making or breaking a neighborhood business, especially a new one.

Local Searchers

Searchers who land on Yelp pages can search by city and category. They can also drill down by neighborhood and see every business in that area that has at least one Yelp review. (A business can only get listed on the Web site by getting a review from a member, which is known as being “yelped.”) Visitors may then filter results by the best match, the highest rated, the most reviewed, price, distance and features, like parking, reservations, credit card acceptance, Wi-Fi, and the like.

Yelp gets its revenue from local businesses that advertise on the site. So, Yelp has to balance the opinions of users with the needs and wants of those advertisers, who, of course, want more customers. In a way, it’s like bar owners who make a living selling liquor, but at the same time must regulate its intake among their most dedicated consumers.

It’s a fine wire Yelp walks and it has been subject to criticism, such as accusations of extorting business owners to pay for advertising in order to remove poor reviews. Some frustrated business owners have tried to ban yelpers from their establishments because of the power they wield.

Local Businesses and Yelp

No matter what your personal opinion is of Yelp, if you have a local business, you need to manage your online presence there. Yelp probably ranks well for your best search terms and your customers and potential customers are finding Yelp reviews about you through the local search results. This will go on with or without you, so it’s better to be an active participant than to stick your head in the sand.

First, look for your business on Yelp. It will not be listed until it receives a review. If you have no reviews, encourage happy customers to talk about you there. Then, claim your listing by setting up a free business account. Your legitimacy will quickly be verified through a phone call from Yelp. Then, you can enhance your profile with details about your enterprise.

Business owners may not respond publicly to criticism by Yelpers. However, if a member is agreeable to receiving responses from the businesses they review, owners may e-mail them privately. This also provides an excellent avenue for thanking customers who leave good reviews.

Yelp also offers a sponsorship program, which can run from about $300 to $1,000 per month. This provides a presence in the sponsored search areas, enables the advertiser to choose one consumer-generated review to appear at the top of its own profile page, enables a business to enhance its page with a slideshow, and makes it possible to block a competitor’s sponsored ads from appearing on their page.

Start with Yelp’s guidelines for business owners . It explains how it all works and also gives good advice about how to conduct safe and effective online reputation management for your local business.