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Gartner: Fake Online Reviews Becoming a Bigger Problem

October 16, 2012

Ten to 15 percent of social media ratings and reviews will be fake by 2014 and at least two Fortune 500 brands will face litigation from the Federal Trade Commission (FTC) over the next two years, according to predictions in a Gartner report.

Gartner said that with consumers increasingly relying on social media ratings and reviews before deciding on where to make purchases, companies are being enticed to pay for favorable recommendations.

"With over half of the Internet's population on social networks, organizations are scrambling for new ways to build bigger follower bases, generate more hits on videos, garner more positive reviews than their competitors and solicit 'likes' on their Facebook pages," said Jenny Sussin, senior research analyst at Gartner, in a statement. "Many marketers have turned to paying for positive reviews with cash, coupons and promotions including additional hits on YouTube videos in order to pique site visitors' interests in the hope of increasing sales, customer loyalty and customer advocacy through social media 'word of mouth' campaigns."

On the downside, organizations paying for phony reviews can and have faced both public humiliation as well as monetary fines. Under a 2009 FTC ruling, paying for positive reviews without disclosing that the reviewer had been compensated equates to deceptive advertising and would be prosecuted as such. Gartner noted this as the FTC is beginning to crack down more on this practice of fake reviews/ratings. Also, reputation firms are identifying fake and defaming reviews and requesting the reviewers or host site remove them or face legal repercussions. Gartner predicted a similar market of companies to emerge specializing in reputation defense versus reputation creation.

Gartner believes that although consumer trust in social media is currently low, consumer perception of tightened government regulation and increased media exposure of fake social media ratings and reviews will ultimately increase consumer trust in new and existing social media ratings and reviews.

"Organizations engaging in social media can help to promote trust by openly embracing both positive and negative reviews and leveraging negative reviews as a way to encourage customers with positive product or service experiences to share them on review sites as well," Ms. Sussin said. "They should also respond to ratings and reviews in an official capacity to demonstrate willingness to engage in productive conversation with anyone."

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Discussion Questions:

Do you think there are proper ways for companies to pay for or encourage Facebook 'likes' and positive online reviews? How does the likelihood of increased media exposure over tainted reviews change how businesses should manage positive and negative reviews?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

Is it appropriate for retailers or brands to offer incentives for 'likes' on Facebook?

Comments:

"...proper ways for companies to pay for or encourage Facebook 'likes' and positive online reviews..." is precisely what we should be discouraging! This point of view disappoints me as it undermines consumer control in search of a way to leverage technological advances to commercialize honest and open consumer communication and discourse. Brands should spend their time and energy providing great products and customer service and experience to earn favorable reviews instead of trying to 'trick' consumers. The new digitally empowered consumer world has driven transparency. Exposure of those that use these types of tactics is the best disinfectant. Brands that practice this tactic will suffer in the court of social media and the global jury of digitally enabled consumers.

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Adrian Weidmann, Principal, StoreStream Metrics, LLC

Businesses should encourage consumers to "like" their brands, but should not cross the line of paying for positive reviews. We're still in the relatively early stages of the social media phenomenon. Companies are learning how to use social media. While the temptation might be there to try to game the system, most companies will play by the rules. Those that don't will be outed by their competitors or irate consumers.

The purpose of social media is to engage in a discussion with consumers. This means listening to positive and negative reviews of products and services. If used honestly, social media can help a business grow. When exploited dishonestly, social media can embarrass a company and cause it to lose business.

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Max Goldberg, President, Max Goldberg & Associates

"Do you think there are proper ways for companies to pay for...positive online reviews?" Pay for? Of course not...why are we even asking this question?

'notcom'

First of all let me honestly and sincerely say from the bottom of my heart how much RetailWire means to me!

I read it seven days a week ... er ... I read it every day and reread it on weekends. It's changed my life in ways I'd rather not describe in print ... Oh ... Rick, Al, et. al. ... Thanks so much for the "donation." Trust me, it will be put to good use.

On an, (only slightly,) more serious note, this is a real, "Capital P," problem. There is just no way to police every review. I agree with Adrian. We shouldn't be thinking about how to game the system, but rather participate in a system where we clearly have limited, (at best,) control. There are no proper ways to exert undue influence.

As more media coverage of social media happens, methinks that ship has sailed.

As I've said before and will no doubt say again, Facebook isn't for everyone, especially those that insist on trying to play by their old rules.

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Ryan Mathews, Founder, ceo, Black Monk Consulting

I think most people reading reviews of any kind have already learned to be cautious and filter obviously biased posts. Bottom line, businesses need to engage in social listening, using sentiment tools to capture both positive and negative reviews and respond in a timely, intelligent manner.

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Ralph Jacobson, Global Consumer Products Industry Marketing Executive, IBM

There are effective ways that brands can encourage the development of authentic reviews. It requires a mindset to do things the "right way." For example, retailers can ask customers to write a review 2-3 weeks after purchasing a specific product. Amazon does this to great effect, and some traditional retailers have started similar programs. Brand marketers can also ask customers to write reviews. For example, when launching a new product they can give samples to targeted customers, and request that they write reviews to let peers know what they think. In this second scenario, it's imperative that the brands or their agencies provide clear training and monitoring to ensure that customers are posting authentic reviews with clear disclosure about receiving free samples. This can be a very effective marketing strategy -- and brands that understand the right ways to pursue it will create competitive advantage.

Malcolm Faulds, SVP Marketing, BzzAgent, a dunnhumby company

People who do the nasty things to other businesses will eventually receive the bad karma they deserve. Life balances out most idiots acting irresponsibly, and for a while they may get away with trashing another business, but in the long run the truth usually prevails. Treat the folks well, and the good that you do will get noticed in a positive way.

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Tony Orlando, Owner, Tony O's Supermarket & Catering

This trend is already taking place in a subtle way in the offline world. Most people who have cars repaired at dealerships in the US are asked to provide ratings of the service given.

There is always a "hint, wink" from the service provider suggesting that "anything less than a 10" won't serve them well. Therefore, I suggest most of the rating given are higher than they should be without "encouragement."

This same trend is accelerated online for obvious reasons. Learning: trust not reviews, but referrals and recommendations from "real" friends, online and offline.

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Bill Hanifin, Managing Director, Hanifin Loyalty LLC

Social proof in the form of reviews has a powerful influence on purchase decisions. What's interesting is that when surveyed, most consumers say they know that many reviews are bogus, but still allow them to influence their purchases.

It's clear that many savvy online shoppers believe they know how to filter and tune out the fake reviews. The best practice e-commerce sites are giving consumers more tools to do so. Showing a special badge for review from verified purchasers, showing ratings of the actual reviewer, and allowing shoppers to filter reviews by reviewer attributes are all great tools to help consumers get trustworthy reviews.

Now that reviews are such an important part of the path to purchase, I'm eager to see how physical retailers will make them more accessible in the store.

We've seen mobile tools from many retailers, printed fact tags from Best Buy, and C&A in Brazil even put facebook likes right on the hanger.

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Jason Goldberg, VP Commerce Strategy, Razorfish

Part of the problem with social -- and reviews are at the heart of it -- is the potential for fake personas and hence, fake reviews. Social works as a real voice for real people. It works for brands when they, and the people representing them, are authentic.

Paying for reviews and likes require disclosure and should be questioned. Whether a brand is likable to begin with is a more important question.

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Phil Rubin, CEO, rDialogue

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