Enhancing conversion with consumer reviews isn’t a new idea. It always works, even to the point of negative reviews having a positive effect on sales. Empowering affiliates to quickly put reviews (thematically-sorted across different merchants) to good use, and doing this in a manner than helps merchants monitor affiliate compliance with the FTC’s rules on testimonials and endorsements… now that is definitely innovative and has been much needed.

I was thrilled to learn that something like this was in the works when in early spring I got approached by Ankesh Kumar, CEO of SearchReviews. Their tool was originally conceived as a tool for affiliates to use consumer reviews that merchants would upload (in a manner similar to product datafeeds) to the SearchReviews’ server. I proposed taking it one step further, turning it also into an compliance-monitoring tool for merchants. I still believe this to be a very promising idea, and am excited to see them roll out their tool today.

Examples of how the SearchReviews affiliate widget looks and works may be found throughout iPond.com. Here’s one of them:

I wish SearchReviews luck. This is a very interesting idea.

When you search Google for a doctor, plumber, restaurant or any other business listing in a particular geographical location, besides a list of matches (conveniently marked in the map of the location) with their website and phone number listed, you can also read independent reviews on these businesses:

Some of these reviews have been left by people right there on Google (there is a field to leave one for each business you see), while others are being pulled from such review engines as CitySearch.com, Menutopia.com (for restaurants), TripAdvisor.com (for hotels), and others. Some of the reviews posted do give businesses really excellent recommendations, while others are less than flattering. It is an extremely helpful function, and I am glad Google is providing it. It helps transform the world of business (and customer service) into a much more transparent (hence, better for the customer) world.

The part that businesses still have to learn is that now they have a job too, and that job is (a) to monitor what is being said about them online (of course, this is not limited to reviews only, but includes microblogging platforms, blogs, forums, etc), and (b) react to it. Many businesses that operate offline, and may not even have a website, presume that the online space is not something to even bother about. Oh, you bet it is!! Whether you have a website, an affiliate program or a Social Media strategy is irrelevant. Things are being said about you online, and you better know what is being said, and respond accordingly.

At CitySearch.com, for example, businesses can provide their comments to reviews:

Marriott, for example, is doing this on TripAdvisor.com:

If you care about your business, you should be doing it too!

Here are 10 free online tools that can help businesses (or anyone, really!) monitor what is being said about them online:

• Google Alerts
• Social Media Firehouse (by Yahoo!)
• TweetBeep
• BuzzMonitor
• Collecta.com
• BackType
• BoardReader
• WhosTalkin.com
• SocialMention
• BlogPulse

Whether you like it or not, the world is becoming more and more transparent, and the sooner your business realizes that the online space has a potential to be a true two-way street, and that it can either make or break a business, the better for you. I always read online reviews before booking a hotel, picking a doctor, or going to a restaurant; and so do thousands (if not millions) of other consumers.

Interesting survey data has been published by eMarketer.com with a reference to an August research conducted jointly by Internet Retailer and Vovici Corp.:

As look through the above statistics, the two things that I see in it are:

1. Social Media Channels Are Top Priority

While I am not entirely sure why “Blogs” and “Consumer ratings” have been mentioned separately from “Social Marketing” (I would argue that these two represent a Social Medium each; see my Types of Social Media to Use in Marketing post), it appears that the exploration of Social Media is currently the top priority for US online retailers.

2. Affiliate Marketing Includes Most of These

While it is unlikely that any affiliate will happily engage in “Live chat” with customers, and/or do the merchant’s work of “Product personalization”, the top four “applications” on the list are right up the affiliate marketing alley. In addition to a decision to explore these channels on their one, online retailers should realize (but will they if no one explains it to them?!) that affiliates can also effectively promote them through Social Media, distribute their videos, give them excellent exposure in their niche/product-specific blogs, and even help obtain additional ratings and reviews (some put such tools together by themselves, while others could definitely use advertisers’ help with this). With proper attention to the affiliate marketing channel, the employment of the top “applications” can be considerably more efficient, and happen on a much wider scale.

An excellent question was posed by Eric Alexander earlier this morning:

Does it [the passing of the new Federal Trade Commission's disclosure rules for "endorsements and testimonials"] only affect product or service endorsements or even all affiliate links, banners, etc that a website may publish?

I’ve just given the Guides a second (or really third or fourth) look. They state that the Federal Trade Commission was specifically looking to address issues connected with “the messages conveyed by consumer endorsements” and particularly with “the use of so-called “disclaimers of typicality” accompanying testimonials that do not represent experiences that consumers generally achieve with the advertised product of service” (p. 2). Upon receiving feedback on the 1980 version of the Guides, some of which argued that “the proposed revisions to the Guides could have a negative affect on emerging media channels and impede the ability of businesses to communicate with consumers through legitimate testimonials and endorsements”, the Commission has still decided to proceed with the new Guides. The purpose of the newly introduced rules was not to interfere with legitimate reviews and testimonials, but rather: to address the so-called “non-typical testimonials” (pp. 3-4). What exactly is the FTC trying to address, and who exactly is affected? Reading on, we see the following paragraph:

The Commission does not believe that all uses of new consumer-generated media to discuss product attributes or consumer experiences should be deemed “endorsements” within the meaning of the Guides. Rather, in analyzing statements made via these new media, the fundamental question is whether, viewed objectively, the relationship between the advertiser and the speaker is such that the speaker’s statement can be considered “sponsored” by the advertiser and therefore an “advertising message.” In other words, in disseminating positive statements about a product or service, is the speaker: (1) acting solely independently, in which case there is no endorsement, or (2) acting on behalf of the advertiser or its agent, such that the speaker’s statement is an “endorsement” that is part of an overall marketing campaign? The facts and circumstances that will determine the answer to this question are extremely varied and cannot be enumerated here, but would include: whether the speaker is compensated by the advertiser or its agent; whether the product or service in question was provided for free by the advertiser; the terms of any agreement; the length of the relationship; the previous receipt of products or services from the same or similar advertisers, or the likelihood of future receipt of such products or services; and the value of the items or services received. An advertiser’s lack of control over the specific statement made via these new forms of consumer-generated media would not automatically disqualify that statement from being deemed an “endorsement” within the meaning of the Guides. Again, the issue is whether the consumer-generated statement can be considered “sponsored”. (pp 8-9)

The FTC’s concern is clear: are the “positive statements” (note the adjective here!) influenced by the prospect of earning money, or are they posted without any monetary motivation attached?

So:

• The FTC is concerned with consumer-generated media — specifically with product/service endorsements/reviews/testimonials.
• The main question is whether there is a sponsorship relationship present between the website owner (or producer of the content), and the advertiser, or not.
• The goal is to provide a transparent environment where if a sponsor-endorser relationship exists the end-user/consumer/reader must be notified of it through a proper disclosure of the relationship

Additionally, since the above text talks specifically about “positive” reviews and endorsements, the question of whether a negative review with a merchant’s ad on the site be deemed an “advertising message” remains open. Knowing that negative reviews also increase sales, it would only be just to presuppose so. However, this (just as anything that is written in this post) remains to be my personal presupposition.

Another question related to the consumer-generated media would be this: what if someone starts a forum which offers its readers a platform for their reviews (non-biased, subjective yet not sponsored in any way), and decides to monetize it by adding ads to it (be they text links from within the people’s reviews, or rotating banners, or even a directory of the services that are being reviewed where every link is being compensated in some form)? Would the obvious monetary interest of the forum’s owner affect the trustworthiness of the reviews posted by independent reviewers? Unlikely. Can the FTC get concerned? Most probably so.

And finally, let’s briefly look at other websites that have an obvious monetary interest in promoting merchants, but are not producing reviews/endorsements as such.

Example 1

Comparison shopping engine (with or without a “review product” function) which provides consumers with an option of searching products across different advertisers, sorting them by price, popularity (either based on a review rating, or on the “most frequently viewed” stats), alphabetically, etc. Would it be necessary for such a website to disclose the monetary connections with the “sponsors”? Obviously, this includes not only affiliate websites with a comparison shopping function, but also such giants of the comparison shopping vertical as Shopping.com and Epinions.com, Shop.com, NexTag.com, PriceGrabber.com, mySimon.com, Shopzilla.com, and multiple others.

Example 2

A fishing (or any other topic) blog where the author is post his fishing tips and pictures, and has either banners, widgets, or other types of affiliate links “on the side”, but offers no reviews as such? Would this website be required to disclosure the blogger’s financial interest in his readers purchasing from the advertisers he/she promotes?

Example 3

A cashback affiliate (e.g.: FatWallet.com), or a coupon affiliate (e.g.: CouponCabin.com).

Example 4

A paid search affiliate (whether they link their PPC ads directly to the merchant, or route them via a website of their own, but provide no merchant reviews on the latter).

The list of examples could go on and on. The primary question is what we started this post with or Does a publisher that is not explicitly involved in reviewing their advertisers’ products or services have to provide disclosures of monetary connections? I don’t see anything that would imply this in the FTC’s guides. The Commission’s concern seems to be specifically with the objectivity of the “speaker’s statement” when endorsing a product/service. It is being stated that all “endorsements must reflect the honest opinions, findings, beliefs, or experience of the endorser” (p. 60) and when there is a material connection between the endorser and the vendor, it must be clearly disclosed. If there is no such connection, there seems to be nothing to disclose. If there is no sponsored endorsement, there seems to be nothing to disclose either.

Don’t treat any of the above as a legal advice. These are just my personal speculations based what I’m reading in the Guides.

As always, feel free to chime in with your thoughts on the subject by posting them in the “Comments” area below.

Introduced by Amazon back in late nineties, reviews have become a powerful force to drive sales for online businesses of all types.

With the attention that online reviews have been receiving from the Federal Trade Commission lately, it seems appropriate to look into the power behind them. A recent CNN article has quoted some interesting data:

Consumers are becoming used to searching for reviews when they shop online. Internet shoppers rank reviews as the most desired feature of a Web site, according to a recent survey by Forrester Research.

It’s important that site owners resist the temptation to edit or delete reviews they don’t like. “If everything is positive, that raises a red flag among consumers,” says Forrester’s Anderson…

And even negative reviews can be beneficial…[underlining mine]

CNN also quotes AlpacaDirect.com’s experience when even with mediocre reviews on site (e.g. one of their golf cardigans was reviewed as being “kinda sweaty” and a “poor fit”) the sales were observed to raise 23%. Yes, consumers are looking for honest reviews by real people. They do want to know about the shortcomings of the products before they buy. There is no 100% perfect product/service out there, and e-tailers that clearly realize this, only benefit by adding a reviews functionality to their website.

Let’s look at an interesting example. At the time of this post, the #1 bestseller in Amazon.com’s Home & Garden section is a waffle maker by Presto. This product currently has 181 customer reviews averaging 4.5 stars. Some of these reviews rank the product as low as 1 or 2 stars:

Does it mean it’s a bad, unwanted product? On the contrary! For over half a year, it has been in the section’s Top 100 products, and now it’s an absolute bestseller:

Back in 2007 Sam Decker quoted an eVoc Insights study which reported that 48% of “consumers need to consult reviews before making an online purchase”, and many of them expect to see negative reviews alongside with positive ones — “to make sure they can live with any shortcomings in products they buy” [more here].

Observations show that by helping e-tailers see where the real problems are, negative reviews help us improve based on the feedback received. Listening, being honest, staying calm, speaking like a real person, and promising to be better are recommended by Lisa Barone as the ways to handle negative reviews in a constructive way — one that establishes the real credibility and trust.