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The Quiet Social Media Revolution: the growing importance of user-generated feedback and its impact on corporate reputation and consumer behavior

08/06/2010 -by:Silvina Moschini , CEO & Founder, Intuic | The Social Media Agency

The explosion of social media sites like Facebook, YouTube and Twitter continues to receive endless media coverage and the attention of PR professionals and marketers. But another social media revolution is well underway, lurking quietly in the shadows of the web.

In the last few years, user-generated content (UGC)—specifically product and service feedback and reviews—has become a crucial factor in online reputations and brand images. This segment of UGC is now a driving force behind consumer behavior and sales, and its growth shows no signs of slowing. And what’s more, the reliability of user-generated feedback is now a major issue that needs to be carefully scrutinized.


In the not-so-distant past…

But before I discuss the present, let’s look at how consumers, myself included, behaved just four or five years ago. Back in those days, it was more common to gather information from “official” sources as we weighed the merits of a particular product or service. For example, I’d Google a hotel and go to its website when I was searching for a place to stay. If the website was professional and the price was right there was a good chance I’d reserve the room. It was the same for books. I’d survey the opinions of paid reviewers and if the book earned good reviews from a trusted source, such as The New York Times, I’d be heading to the bookstore or logging onto Amazon to make my purchase.


The landscape has been fundamentally altered.

Long gone are the days when consumer influence was in the hands of a few. Media outlets no longer control the information being spread, where it’s located or how it’s created. Sites with millions of reviews like Amazon, Yelp, Expedia and Trip Advisor, and smaller sites such as Rip Off Report, have created a brave new world of user-generated reviews that are often replacing sources of more controlled information.

And these reviews are having unprecedented impact on consumer buying decisions. For example, to book a hotel room I now get the information I need from user-generated feedback. If I see a low guest rating, say just 3.2 out of five, and there are recurring themes in the feedback such as “noisy street,” “poorly run” or “no AC,” I’m not staying there. And my behavior mirrors the growing trend.


Does all this user-generated feedback have a real effect? Absolutely.

Study after study is finding the same thing: Internet users are eagerly creating, sharing and consuming feedback at ever-increasing rates, in the form of reviews and recommendations. This feedback is incredibly influential and becoming more so. Consider these findings:
Close to 90% of online shoppers say they trust online feedback and reviews from people they already know, and about 70% say they trust the opinions of people they don’t know. (Econsultancy, July 2009)

Approximately 83% percent of consumers report a desire to share purchase information with friends and family, and 74% are influenced by the opinions of others as they consider purchases.(Manage Smarter, September 2009)


Can we trust anonymous feedback?

Considering the increasing velocity of feedback creation and consumption, and its growing impact on behavior, we must ask questions regarding reliability and consumer awareness. Can we trust these user-generated reviews? Can companies effectively monitor or control this content? And can fake reviews ever be stopped or curtailed? Fake reviews come in many flavors, ranging from negative remarks planted by competitors and disgruntled employees to reviews posted by companies who specialize in fabricating UGC to raise rankings.

The response to these credibility issues by the websites that host UGC has been mixed. Amazon allows anyone to post, but offers reviewers the chance to establish “Real Name Attribution” to help readers determine who they can trust. Amazon says that reviewers who use Real Name Attribution are essentially saying, “With my real-world identity, I stand by what I have written here.”

Is this a marketing tool, or an effective method to establish credibility with consumers? At this point, there is very little data to help answer this question. We just don’t know if consumers pay much attention to whether reviews are linked to real identities.

Yelp claims it has created an algorithm to determine which of its millions of postings are real, and Trip Advisor says its staff searches for phony postings among its 25 million plus reviews. However, both of these claims are hidden behind a shield of proprietary data and company secrecy, so we don’t know what they are really doing to combat the problem.

Arthur Frommer, founder of Frommer’s travel guides, is skeptical that travel websites can effectively monitor user-generated reviews at all. In response to Yelp and Trip Advisor’s claims that they ferret out fake reviews, Frommer asks, “Is there anyone out there gullible enough to agree that a "mathematical algorithm" can reliably distinguish between the honest and the phony recommendation?”

These are questions we PR professionals and marketers need to help our customers address as we work with them to develop user-generated feedback strategies.


Do consumers care about verification?

Consumer attitudes toward the issues of verification and authenticity are also very important. We need to ask, “How do consumers respond to unverified reviews? Do they care enough to parse the intricacies of user-generated feedback?”

If you look at the growing importance and proliferation of feedback, and the high percentage of consumers who rate it as highly influential, it seems they aren’t concerned about verification and authenticity. Consider this data:

In October, 2009, 84% of consumers reported that they were more likely to go online and read reviews prior to making a purchase, compared to 12 months earlier. This according to a survey by Brand Reputation. (Retail Bulletin, October 2009)

Nearly 78% of respondents say that consumer recommendations are the most credible form of advertising. (Nielsen, "Word-of-Mouth the Most Powerful Selling Tool", October 2007)


How can we help our clients stay ahead of the curve?

To begin, our clients must continue to mine the ever-expanding volume of conversations about their products and services. This monitoring can be done manually, or with online reputation monitoring tools. Either way, it’s a difficult task and PR professionals need to be ready to offer advice and support.

In addition, companies must carefully choose which feedback deserves a response—and which should be ignored. “No comment” is often the best policy in the situations where this saying applies: “Don’t fight a pig. You’ll both get dirty and only the pig will enjoy it.”

Other user-generated feedback trends I see making headlines in the coming year:
Review sites will be pressured to allow more direct responses from business owners and authors.
Companies will attempt to educate their customers about how to identify verified versus unverified feedback sources.
Companies that motivate customers to post positive reviews will see tremendous benefits.
Interested stakeholders must suspect that others are “cheating” with fake reviews. And when possible, they should dedicate resources to expose this behavior. 


Where are we headed?

First, the Internet changed the rules of media. Next, social media changed the rules of the Internet. And now, user-generated feedback has changed the rules of social media, and the key drivers of corporate reputations and sales are shifting even further from controlled sources. As this quiet revolution continues to unfold, the volume and impact of user-generated feedback and reviews shows no signs of abating.

And even though social media in general is the darling of marketing, advertising and PR, very few companies have taken the time to create social media strategies of any kind, much less user-generated feedback strategies. Companies that fail to actively engage their customers in the realm of user-generated feedback do so at their own peril. They are signaling customers that they are unwilling to engage them on their terms, and the results will only be negative.

To date, it has been very difficult to quantify the results of user-generated feedback. However, many forward thinking companies are already monitoring the online sentiment surrounding their products and services—and are reaping the rewards. This task is difficult, but PR professionals can step in and offer support and guidance.

This latest Internet revolution is an incredible opportunity for those who can offer leadership and insight into this area of ever-growing significance.