Marketers risk reputation and fines with paid reviews and ratings

Earlier this year, research from Eccomplished revealed that online reviews trump peer-to-peer word of mouth. They found that while 23% of online shoppers said they asked their family's and friends' opinion to help them make a purchase decision, significantly more (31%) turned to online product reviews or endorsements.

According to Issue 1 of the Eccomplished Quarterly (.pdf), "The importance of peer-to-peer word of mouth is compounded further by more shoppers citing having read comments on an online article (18%) than reading an article itself (14%) to help them make a purchase decision."

And while the influence of social media remains relatively small (just 6% of Eccomplished's respondents turned to their networks to help make a purchase decision), marketers are conscious of its increasing role.

However, instead of relying entirely on consumers to leave positive reviews marketers are spending on paid reviews and ratings, keen to increase Facebook Fans or YouTube hits.

Gartner analysts estimate that paid reviews will account for between 10% and 15% of online reviews by 2014. Cash, coupons and other incentives are offered in return for positive reviews and comments, 'Likes', and YouTube hits.

Those incentives are fine and dandy, as long as the person behind the review discloses the fact their comments have been incentivized. In 2009, the Federal Trade Commission determined that paying for positive reviews without disclosing that the reviewer had been compensated, by whatever means, equates to deceptive advertising.

For instance, companies giving away a free product in return for a 'Tweet' or a 'Like', as Target did with its free beauty bag offer earlier this year, should make clear the recommendation has been incentivized. Adding a hashtag, such as #paid, to posts and Tweets would be acceptable.

"Marketing, customer service and IT social media managers looking to use reviews, fans and 'likes' to improve their brand's reputation on social media must beware of the potential negative consequences on corporate reputation and profitability," said Ed Thompson, vice president at Gartner.

Tags: endorsements, fake reviews, Federal Trade Comittee, law, online rating, online reviews, paid reviews, regulation, social media