Groupon Deals May Hurt Your Yelp Ratings

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New research suggests that there may be a hidden cost for businesses who offer a daily deal of the type popularized by Groupon. In the months after the daily deal, the businesses' Yelp ratings suffer. 


Researchers looked at 16,000 individual Groupon and LivingSocial deals in 20 cities, the number of Facebook likes they received, and the Yelp ratings of the businesses to which they were attached. The absolute drop in ratings is rather small -- an average of 0.12 stars -- but as the researchers point out, that change could affect the sorting of businesses on the site. One mitigating factor could be that Groupon-running businesses get more Yelp reviews, and my perception is that many users of the site tend to use that as a proxy for a location's popularity. In other words, perhaps the small drop in average rating is balanced out by the uptick in ratings.

The wonderful new paper from John Byers and Georgia Zervas from Boston University and Michael Mitzenmacher from Harvard University was featured on Tech Review's arXiv blog. arXiv notes that the work shows "the power of analyses that fuse sales data with social media effects."
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Alexis C. Madrigal

Alexis Madrigal is a senior editor at The Atlantic, where he oversees the Technology Channel. He's the author of Powering the Dream: The History and Promise of Green Technology. More

The New York Observer calls Madrigal "for all intents and purposes, the perfect modern reporter." He co-founded Longshot magazine, a high-speed media experiment that garnered attention from The New York Times, The Wall Street Journal, and the BBC. While at Wired.com, he built Wired Science into one of the most popular blogs in the world. The site was nominated for best magazine blog by the MPA and best science Web site in the 2009 Webby Awards. He also co-founded Haiti ReWired, a groundbreaking community dedicated to the discussion of technology, infrastructure, and the future of Haiti.

He's spoken at Stanford, CalTech, Berkeley, SXSW, E3, and the National Renewable Energy Laboratory, and his writing was anthologized in Best Technology Writing 2010 (Yale University Press).

Madrigal is a visiting scholar at the University of California at Berkeley's Office for the History of Science and Technology. Born in Mexico City, he grew up in the exurbs north of Portland, Oregon, and now lives in Oakland.

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