For a small business that serves a local area — a restaurant or gardening service, for example — word of mouth can quickly make or break a reputation. When the conversation happens online in organized and professionally managed forums like Citysearch and YellowPages.com, reputations can be made and broken even faster.
At the Interactive Local Media Conference in Los Angeles in late November, comScore presented its findings on the impact of online review sites on local service purchases. The research involved just over 2,000 survey respondents who shared information on how often they read and write online reviews and how they use the information they find.
The E-Commerce Times spoke with comScore Senior Director Brian Jurutka at the conference about his company’s findings.
E-Commerce Times: Looking over the study, one of the first things I saw was that over the period of time the study covered, the use of online review sites grew very quickly — about four times faster than the rate of overall Internet use. What’s behind this growth?
Number one, I think it’s people becoming aware of local service review sites. [Broadband Internet access penetration is] at about 82 percent or so, and broadband users use the Internet differently than everyone else out there. They spend a lot more time online, they do a lot more searches, and it becomes a stronger part of their overall life.
One of the recent statistics I looked at in September of this year [suggests] the average user accesses the Internet about 26 days out of the month; that’s only four days out of the month where they did not access the Internet. And so, as the Internet becomes more ubiquitous and people spend more time online, I think they’re looking for more and more things. And one of those things, fundamentally, is to understand as they make these purchases, who out there is recommending a particular service, a particular restaurant.
I bet you if we were to look at the growth of social networking sites, which I would say are tangentially related to local service review sites, I think the growth would be even stronger in that particular area. As folks are becoming more aware of how they have a power associated with their comments, they’re becoming interrelated out there in the community, and as they spend more time online, we continue to see this growth.
And there’s another component, which is just that, obviously, the base you start from is smaller. As you’re looking at the overall Internet, you’re talking about 180 million; when you’re looking at local service review sites, you’re looking at about a quarter of that, thereabouts.
E-Commerce Times: Even though this has been growing very quickly over the last year, three out of four users have not used an online review to make a decision recently. Is there any way to grow this number?
A couple of things: Number one is awareness. Even though a lot of folks have become much more aware of local reviews, there’s still a significant portion who just don’t get that I can go to a local review site to understand which plumber I want to look at or which auto mechanic I want to look at. Someone like me, I do that on a regular basis, but I think there’s a whole segment of the population out there which is still talking about word of mouth referral. As people become more aware, I would expect this type of growth rate to continue fairly strong. I don’t think it will be 20 percent in the next year, but my sense is that it would probably still be at least in the double digits and probably in the high teens.
E-Commerce Times: How can these review sites monetize themselves? Is there any kind of question about whether including ads for a service will somehow compromise the integrity of your reviews?
That’s actually a really great question, and as you look at some of these review sites, they’re different in terms of their revenue streams. … Some of these are membership-only type sites where you have to pay a membership fee to be a part of it. So there there’s an obvious revenue stream associated with that. Those tend to be more professional-type reviews as opposed to consumer reviews.
Then you take a look at the Yellow Page type of consumer review sites, and I think the monetization there is obvious as well. Primarily, I would see this at least as the Yellow Pages saying, “Hey, to the extent that we have consumer reviews, we’re driving more traffic to the site; therefore, we can sell our Yellow Book, our YP offerings, to a broader set of merchants because of the claims that we can make that say we have this many people coming to our site overall, and we have this many people referencing our source material for local service information.”
I’ve not seen anyone out there put ads on the consumer review portion just yet with the potential exception of someone like a Citysearch. So, at Citysearch — if you go to the overall pages, a couple of high-level pages — you’ll see some information there. But I think as you get down to the detailed business information, I’ve not seen [ads] there just yet. But I don’t see why it would be an issue for national brands to advertise at the local service level.
E-Commerce Times: You mentioned something about professional reviews, and that’s something the study touched on. In some service categories, readers were more apt to place their trust in a consumer-written review rather than a professionally written review. Why?
I think it’s because of a level of trust associated with it. Arguably, in this day and age you’ve seen news stories out there where so-and-so looks like they’re an independent professional that’s out there doing reviews, when on the back end they’re being compensated somehow for their reviews. And maybe it’s naive on the part of the average review reader who says, “Gosh, this other consumer out there is my peer and they have an unbiased view, and therefore I should trust him more than I trust a professional,” when, of course, that other consumer could in fact be the business owner who signed on under a different log-in. And I think that speaks a little to the importance of not just consumer reviews, but having some volume of reviews.
E-Commerce Times: How does volume affect that kind of thing?
Unfortunately, that wasn’t something we asked in our fixed questions. But in the open-ended questions, we got quite a few comments which said something to the effect of, “Why do you use a particular site?” and it was, “Well, they have an adequate number of reviews there.” One of the things we really saw in the open-ended questions was that if you only had a very small number of reviews, they were less likely to be trusted just because they were so skewed.
E-Commerce Times: Professional reviewers aren’t necessarily the only ones who might get compensation for their reviews. Some review site might promise gift cards or things like that. Is there any perception among readers that these reviews are not to be as trusted as that of a reviewer who did not receive anything? Or do readers even have the ability to tell the difference?
I don’t think the readers have the ability to tell the difference other than, “Hey, I went to the Yellow Pages site and I saw they’re offering a sweepstakes entry for entering a review.” But when you actually read the review itself, you don’t know whether or not someone submitted their review under that guise.
That said, we saw nothing at all in the survey to indicate those would be less trusted than others. And we saw that … about one out of five folks actually admitted they were, let’s say, compensated for submitting a review, which is a pretty sizable chunk.
E-Commerce Times: What degree of site loyalty do you see among readers on online reviews? Do they hit up the same site every time to find reviews, or do they just type in the name of a business in a search engine followed by the word “review” and have at it?
That’s actually a good question. It’s something we would have access to. We didn’t specifically analyze the overlap between sites or the loyalty associated with sites. It’s something that’s within our database, but we just have not had the opportunity to pull that out just yet.
E-Commerce Times: Your research found that a one-star rating can be pretty damaging to a business, particularly a medical service or a home service, and it seems that if someone really wanted to, a person could go in there and really skew the review process by planting a lot of bogus reviews. Do you see a large fear factor among local businesses that somehow a competitor or one unfortunately mistreated customer might try to go in there and try to cause a lot more damage than is justified?
Absolutely. I think that is clearly one of the fears out there — and, arguably, you can say that for just about anything. Even if you look at sponsored search on a local level, you can say, “You know what? My competitors are out there doing click fraud. They’re clicking on my sponsored search link and I’m paying a buck fifty every single time.” This is, I think, something that is similar, and I think because the space is, let’s say, still somewhat new and in it’s early stages.
I don’t know of any cases that have actually gone to court because of something like that just yet, but I would not be surprised if there is one in the proceedings, or if there will be one shortly that is essentially that scenario, and some kind of case law will have to be established. …
[At the conference, Citysearch President Jay Herratti] made a couple of good points. Citysearch gets a lot of requests from merchants saying, “This is a bad review — you need to pull this down.” They have kind of an internal review committee to look at this, and I think the gist of his points was that, in general, they tend to say, “It’s part of what the community is saying about your organization, and we have to leave those up.” And I can see that if the review site takes that position, and the merchant really feels strongly about another position, that clearly something will work its way up in the courts. …
The interesting thing here is [that] because these are usually smaller, local services, it may be a little more challenging for someone to be able to muster the financial resources to bring something to court. But I think that as the suits go on to maybe even small-to-medium businesses, or even one of the local versions of a national chain — maybe it’s a McDonald’s or a Burger King or something like that — then someone might have the financial resources and wherewithal, if you will, to contest something like that.
Great story on the quickly increasing impact of online review sites on local businesses!