The Ratings Game: Millennials are migrating away from review sites Yelp and Angies List

NEW YORK (MarketWatch) The markets for personal ads and small -business reviews are taking a hit as tech-savvy Internet users find alternative means of scouting out recommendations for everything from restaurants to handyman services.

Yelp Inc. YELP, -18.60% and Angies List Inc. ANGI, +2.10% on Wednesday both forecast weaker-than-expected revenue growth for the current quarter due in part to stalling growth among their paying members.

While macroeconomic factors have had some effect, social media have raised the stakes for the legacy review sites. Consumers are increasingly opting for free reviews and word-of-mouth recommendations from their trusted friends and relatives on social networks like Facebook Inc. FB, +2.13% and Foursquare over more traditional review sites.

Consumers especially tech-savvier ones raised in the Facebook era want an experience that is fun and personalized. Something they can share or even brag about.

The simultaneous growth of social media and online review sites has caused a shift among consumers were no longer apt to believe everything at first glance and [instead] demand validation, said Valerie Davis, vice president of search media at PM Digital. We no longer blindly trust Yelp reviews.

A recent study from Lithium Technologies found that more than two-thirds of consumers in Western markets were more receptive to recommendations about what to buy from family and friends online over digital ads. This was especially true of the younger adults the so-called millennials surveyed.

Foursquare, which recently turned 5, saw its user base rise to 55 million users, up from 50 million before it unveiled a website redesign in May and a new app called Swarm, meant to further distance its business model from Yelps and those of other local review and search apps. The new version of Foursquare was released in early August.

Foursquare has never disclosed active-user figures, a subcategory that is coveted by advertisers. However, it does boast 6 billion total check-ins a number that it says grows in the millions every day. That loosely compares with Yelps 5.3 million daily reviews last quarter.

Foursquare takes a more customized approach considering users likes, interests and location before offering suggestions, Davis said. Personalization may be the new key to review success.

This is true of Facebooks local awareness ads, which use location-based data and mobile couponing to help businesses target and push ads to people currently within, say, walking distance.

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The Ratings Game: Millennials are migrating away from review sites Yelp and Angies List