User-generated content: How customers form opinions

Anyone who regularly shops online knows how influential customer reviews of products have become. This form of user-generated content (UGC) shows up on the e-commerce sites of internet giants such as Amazon as well as up-and-coming web entrepreneurs across the globe.

And there’s good reason why businesses have encouraged the growth of customer reviews. These little nuggets of opinion do more than company-produced content to help people make up their minds about products. Consider these statistics from a recent MarketingSherpa case study:

• Customer reviews resulted in a 125% higher conversion rate
• Visitors who read customer reviews spent 157% longer on the site
• User-generated content provided a 10% lift in organic search traffic

Customer reviews and other forms of user-generated content can function as an important content merchandising tool, particularly for startups. But as with everything in e-commerce, it’s a case of buyer beware. Here are some things to keep in mind.

Are you for real?
It should come as no surprise that e-commerce sites are full of fake reviews. In the United States, you can hire someone to write a fake review for about US$5.

As researcher Bing Liu says, user-generated content is a “hidden form of advertising and marketing, and it is extremely cheap.”

Commissioning fake reviews is especially tempting to companies in developing countries, Liu says. After all, US$500 might not seem like much of an advertising budget, but it can buy hundreds of fake reviews.

Paid reviews take two forms: positive reviews of one’s own products and negative reviews of a competitor’s products. China’s Internet Water Army offers both options to businesses. Named for their ability to flood the web with strong positive or negative opinions and “information”, this organized opinion spamming is simply one example of a problem prevalent across the globe. However, fake reviews may have a much greater impact in developing economies because of differing regulations.

Great for Google
This doesn’t mean businesses should avoid UGC altogether. Graham Jackson of Bazaarvoice called UGC “Google juice” for good reason: it is the most cost-effective, unique content available to e-tailers.

Over the past couple of years, Google has incorporated user-generated content into search engine results, and it is currently rolling out semantic search. These changes are shifting emphasis from words and facts to phrases, intent, and meaning, which makes the natural language of customer reviews that much more valuable.

Criticism isn’t always bad
What’s more, it’s indubitable that the presence of reviews helps sales, even if a few of them are negative. Panos Ipeirotis, talking about his research on mining user-generated content, notes, “I’ve been surprised to see how negative reviews increase sales. It’s great to have people talking about your product, even if everything they say is not stellar.”

Adding customer reviews and other user-generated content to retail sites is an affordable way to bolster SEO and increase conversions, but it’s also an affordable method of false marketing. Businesses in both advanced and emerging market economies need to take particular care to retain the integrity of user-generated content. And online consumers everywhere need to be aware that products that sound too good to be true usually are just that.