Reputations at stake, companies try to alter word of mouth online

The booming economy of online reviews and product recommendations by everyday 'schmos' on web sites and social networks is anything but what meets the eye.

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By Michael S. Rosenwald
Washington Post Staff Writer
Monday, March 29, 2010

It didn't take long for Julie Liu -- late 20s, smartphone-addicted, constant Googler -- to get hooked on the online review site Yelp. Where to eat Friday night? Read some reviews by random anonymous diners. Oh, that looks good. Book a table online, show up, eat.

But after Liu and her sister opened Scion restaurant in Dupont Circle, they saw Yelp from a different angle. Liu said Yelp's salespeople phoned repeatedly, telling her that if she advertised on the site, negative reviews would move lower on Scion's page and positive reviews would move up.

Liu decided to fight back, joining nine other businesses this month in a class-action lawsuit against Yelp alleging similar tactics -- claims that Yelp executives deny. "Yelp does not manipulate content on behalf of advertisers or penalize those who don't advertise," a spokesman said.

The case raises questions not just about a site with 10 million reviews, but also about whether the booming economy of online reviews and product recommendations by everyday folks on Web sites and social networks is anything but what meets the eye.

What appears at first to be a spin-free, grass-roots marketplace of opinions and recommendations is rapidly turning into a hotly contested battleground where public relations firms and a new breed of imagemakers help businesses counter negative online comments and manage their online reputations -- even giving people free products in hopes of generating positive comments.

Companies including NBC, Sony and Microsoft partner with such firms as Ad.ly, paying individual Twitter users to allow commentary about products in their Twitter feeds. The posts are marked as ads in parentheses but look like regular tweets about what one had for lunch.

Some Web sites offer cash for reviews. For $2.50 each, ReviewStream.com says, "You could review anything around you including: any products, hi-end technics, companies, hotels, politics, cities, stores on your street, or even your neighbor's pets!"

PR companies track people who post negative comments about everything from pizza to gadgets and then offer those naysayers free products or technical support, hoping to reverse the flow of opinion about their clients' goods. Many start-ups sell online tools that scrutinize Twitter and Facebook to rank users' online influence, helping manufacturers, hoteliers, restaurateurs and PR firms figure out who can best spread messages quickly.

"It is critical for us to understand who is important," said Jonny Bentwood, an Edelman PR executive who created a Twitter scoring system called Tweet Level. "We want to understand who the key influencers are, what they are saying and what their impact is."

Online ads unpredictable

In olden days -- like 10 years ago -- companies big and small reached consumers through mass-marketing campaigns, interrupting magazine articles, TV shows or music on the radio with clever ads. Technologies such as TiVo, satellite radio and iPods (and iPhones and soon iPads) have reduced advertisers' opportunities to break into consumers' media usage. The prospects for online advertising are uncertain: More than 40 percent of surfers don't click on ads, according to a Pew Research Center study.

Online, the authority once vested in journalists and advertisers is often granted to total strangers: Seventy percent of Internet users trust online recommendations and reviews, according to a Nielsen study. "People are tired of traditional ad messages, and they feel that connecting with other consumers is more helpful," said Chris Dellarocas, a Boston University management professor who studies online comments. "It's more fun. Consumers love to interact."

Although consumers no doubt still get tips about new restaurants and businesses in old-fashioned ways -- at the office or kids' soccer games or on e-mail discussion groups -- marketers are focusing their energy on changing the word of mouth on the Web. Digital word-of-mouth marketing -- a new twist on a sales method that's sold stuff since long before the invention of the printing press -- is expected to top $3 billion a year by 2013. That explains why Google reportedly tried to buy Yelp last year for $550 million and why Yelp felt confident enough to essentially say, "No, thanks. We'll be worth even more later."


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