Before the Internet, consumer opinions regarding personal experiences with businesses and/or specific products or services were passed from person to person or discussed in small groups via informal conversations or what is more commonly known as “Word of Mouth” marketing. However, the Internet has transformed this intimacy into more of a broadcast communication method, allowing these types of opinions and recommendations to be communicated out to the masses in a matter of seconds.

This is accomplished through the use of online ratings & review systems or what is sometimes referred to as “reputation systems”. These online applications allow consumers to easily express their opinions as well as read opinions left by other participants through the click of a link or a button.

YellowPages.com Business Listing Example

Rate & Review Form

Read Reviews Page

Once an opinion / review is entered into one of these systems it is quickly posted near or directly following a specific business or product’s listing information. Some systems allow consumers the ability to actually rate a business and/or product on a specific scale, which then factors into an overall ratings score for the business or product. This rating is often used as the determining factor or one of the factors in establishing listing positioning.

eBay and Amazon.com started this trend back in the late 1990’s by allowing their users to post seller and book reviews online. Since this time, consumer generated reviews have had a major impact on the online shopping process. A recent Forrester Research study found that over 76% of online consumers use ratings & reviews as part of their online research process. In fact, 6 out of 10 consumers rank ratings and reviews as one of the most trusted sources online; outranking other public forum sites, blogs, as well as other ad vehicles, such as search engine ads, banners, radio and even television advertising₁.

And not only are consumers using this information in their research process, but it is also having an impact on where consumers ultimately choose to make a contact and/or purchase. According to a study conducted by eVOC Insights and RelevantView, it was shown that 63% of shoppers are more likely to make a contact or a purchase at a site that offers this type of content₂.

By the end of 2006, 43% of e-commerce sites offered customer ratings & reviews, almost double the 23% figure at the end of 2005₃. In just the past few years, this trend has extended into Local Search sites such as Judy’s Book and SuperPages.com. As a result, more than 80% of the top local search sites now offer a ratings & review component to their listing information as shown in the chart below.

Although site publishers and marketers alike are often reluctant to have this type of “uncontrollable” content posted, all studies have shown that in the long run — a review (whether good or bad) is better than no review at all. As Sucharita Mulpuru of Forrester pointed out, “More than 80% of reviews posted online were positive, and the negative reviews that did exist were generally considered helpful to consumers.”

TMP Directional Marketing continues to work with the individual publishers to encourage that the posted content is subjected to a verification process to ensure it is accurate and that advertisers have the ability to respond to the content (both positive and negative). In fact, TMP DM encourages publishers to follow the process and guidelines established and set forth by the Better Business Bureau as noted below:

• Company in question is contacted and provided with a copy of the customer claim / review / complaint etc.
• The company has 3 business days after receipt of the above information to submit a reply. If no response is received then the publisher would then proceed with the posting of this information.
• If a response is provided back, a copy should be promptly sent to the consumer, excluding any materials designated as confidential.
• The consumer has 5 business days after receipt to submit a reply. If no response is received, then the publisher would proceed with consideration of this claim based solely on information received to date.

In general, TMP Directional Marketing recommends the participation in and use of online ratings & reviews systems. This recommendation is based on both primary and secondary research that has been conducted in this field, which has shown that the benefits of these systems far outweigh any risks. In addition, most site publishers have taken steps to ensure the validity of these ratings through manual editorial reviews of negative ratings/posts prior to the release of this information online, as well as offering the ability for business owners to easily and immediately respond to any and all reviews.

Benefits of Online Ratings & Review Systems

• Customer referrals are a top generator of new business.
• Lets advertisers distinguish their quality-focused business from the competition.
• Now satisfied customers have a place to go to literally tell the world. Encourage this!
• Businesses gain valuable feedback from real-time customer reviews.
• Businesses can respond to individual user reviews and demonstrate excellent customer service.
• Abuse management and appeals processes protect advertisers from fraudulent or abusive.

Comments

• Over 10% of submitted reviews are rejected (and thus not posted) due to questionable content
• Studies have shown that businesses with a rating / review receive double the performance (in clicks / contacts) of listings without₄
• Based on an independent study conducted by SuperPages.com, it was shown that:
• Businesses with a review received twice as many clicks as those without
• 90% of published review were positive (rated 3 or more stars on a 5 star system)
• 80% of online reviews are rated 5 out of 5 stars

Risks of Online Ratings & Review Systems

• As more and more sites introduce this type of user generated content, businesses are more at risk that 1 or 2 negative reviews can greatly impact their overall business rating. However, as shown in multiple studies, overtime these ratings balance out to be more positive than negative.
• Once a user review is posted to a specific business, there is no system in place to date (on any site) which informs these businesses that this type of posting exists. Due to the immediacy of some of these posts, there is the potential that a negative review will be posted online for several weeks, months and even years before a business is aware of this information and/or has the ability to respond.

Although ratings & reviews tend to have more positive effects on a business than negative, TMP Directional Marketing will work directly with each client to determine the best approach to the use and management of these systems based on each advertiser’s specific situation. In circumstances where the nature of the client’s product and/or service offering or the lack of traffic to certain sites or categories would greatly increase the risk of negative reviews, TMP Directional Marketing will work directly with site publishers on ways to protect these advertisers. In extreme circumstances an advertiser may be granted permission to opt-out of such systems, however, this ability is not guaranteed on any site.

For more information regarding this subject please contact your TMP Directional Marketing Account Executive or visit us online at www.tmpdm.com.

_{1 Consumer Generated Media 101.” Forrester/Intelliseek Research
2 “Retailers put customers to work online.” eVOC Insights and RelevantView, February 2007
3 MarketingSherpa, February 2007?
4 Superpages.com Internal Log File Data; 12/ 20/05-12/31/05}