KEY CONCEPT

Increased awareness of the power of online word of mouth (WOM) in marketing means many companies now offer people financial incentives to write reviews of their products and services. But this could be a short-sighted strategy. Recent research suggests that knowing a review has been ‘solicited’ leads to negative pre-conceptions about products among potential consumers – and that these could prove quite hard to reverse.

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IDEA SUMMARY

Online product reviews are becoming an important part of the marketing ‘mix’. In 2012, a study by Bazaarvoice found that 80 per cent of ‘Generation Y’ consumers (those born between 1977 and 1994) are heavily influenced by consumer-generated reviews from strangers when they make purchasing decisions, particularly in categories such as electronics, cars and travel.

The same year, Nielsen found that 92 per cent of 28,000 consumers trust ‘earned media’ such as online word of mouth (WOM) and product reviews – and that faith in the latter has increased by 15 per cent since 2009.

Tapping the potential of online WOM isn’t easy, though. Lots of satisfied customers lack the intrinsic motivation to write about their purchases and experiences.

Consequently, many companies are offering extrinsic rewards – e.g. financial incentives — to potential reviewers. Tactics range from inviting people to ‘spill the beans’ in exchange for entries into prize draws, and offering discounts on future purchases and awards of ‘loyalty points’, to using services that connect businesses with consumers who are willing to earn cash by reviewing products, such as PayPerPost.com, SponsoredReviews.com and PayU2Blog.com.

But paying for ‘consumer-generated content’ creates as well as solves problems. There are significant ethical and legal and regulatory implications. Concerns about ‘deceitful hyping’ mean disclosure of incentives is now either recommended or required by many regulatory authorities around the world. (The US Federal Trade Commission, for example, requires bloggers to disclose any incentives given to them.)

Do the advantages of solicited consumer-generated content outweigh the disadvantages, then? Are paid-for reviews value for money? And, crucially, what does disclosure of payment mean for consumers’ expectations of product quality?

Four recent studies, based on two product categories (computer games and music), addressed questions like these, focusing on whether solicited reviews are perceived as more helpful (the more helpful a review, the more likely it is to influence a consumer) – and whether their benefits are negated by the knowledge they’ve been paid for. They found that:

• Content creators who are paid to write online product reviews are perceived by content consumers as more helpful, but not more positive and not less objective. (Payment seems to ‘professionalise’ content, causing reviewers to try a bit harder.)
• Despite perceived improvements in review quality, payment disclosure results in content consumers lowering their review-based expectations of product quality.
• These lower expectations are the result of feelings of doubt in product quality. (Incentive disclosure seems to lead people to question not only the credibility of the review but also the company’s motives.)
• The negative effect is found even when the review is not the only information available, irrespective of whether incentive disclosure is specific (e. g. “the reviewer was paid $1”) or ambiguous (e.g. “the reviewer was paid”), for different types of products, and carries over to affect consumers’ evaluations even after first-hand product experience.

While further investigation of its long-term effects is needed, disclosure of payment appears to be a ‘noisy signal’ to consumers that drowns out the ‘sound’ of a helpful review.

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BUSINESS APPLICATION

Given disclosure is consistent with ethical practice, this research poses something of a dilemma for companies. How should they respond? The researchers recommend a review of the policy – and make two specific suggestions:

• Avoiding direct payments and instant rebates, etc., and, instead, offering incentives that are less likely to raise doubt in consumers’ minds — for example, entries into prize draws.
• Providing content consumers with more information about incentives – for example, explaining that incentives were given to compensate reviewers for their time and were not attempts to bias opinions.

Given its potential benefits, finding ways to make solicited content work should, perhaps, be a priority for marketers. 

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REFERENCES

‘Does Paying for Online Product Reviews Pay Off? The Effects of Monetary Incentives on Consumers’ Product Evaluations’, Andrew T. Stephen, Yakov Bart, Christilene Du Plessis & Dilney Conçalves. Working Paper (2012).

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