Internet currency

Citation

(2010), "Internet currency", Journal of Consumer Marketing, Vol. 27 No. 7. https://doi.org/10.1108/jcm.2010.07727gag.001

Internet currency

Article Type: Internet currency From: Journal of Consumer Marketing, Volume 27, Issue 7

Edited by Dennis A. PittaUniversity of Baltimore

Marketing professors of a certain age remember what promotion used to be. We taught our classes the five different forms of media: advertising, personal selling, publicity, word of mouth, and finally everything else which we call sales promotion. We were lucky. Back then, advertising commercials supported extensive television programming and many were entertaining in themselves. People would talk about funny or unique commercials and sometimes the music or actors in ads achieved popular culture success. Our students usually connected immediately. In some countries, newspapers were bulky because of their advertising content which supported considerable editorial material. Promotion revenue made it all possible. The nature and scope of promotion changed dramatically just 10 years ago with the introduction of online media and the change has accelerated over the last few years. In some cases, the changes have left the traditional media to wither.

Early online marketing attempts

Initially online advertising gained marketers’ attention. Every commercial web site seemed to have banner ads from the host or a paid advertiser. User forums that catered to special interest groups and charged no membership fees found financial support in the form of advertisers. The focused nature of the interest discussions maximized advertising specificity and allowed targeting of very small target audiences. One problem is the “e-advertising law of diminishing returns” (McCabe, 2001). Since 2000, banner advertising rates have decreased in the face of click through rates of less than 0.5 percent. Put another way, 99 percent of all banner ads spark no further interest. While online advertising should be used as one medium in a comprehensive mix of media, it cannot carry the entire advertising load.

One of the revolutions in promotion has been the growth of user-generated media. YouTube is one example that allows users to create multimedia content for the web. Some of the content is extremely popular as measured by the number of hits received. Overall, users are assuming greater importance in communications. In earlier times, marketers concentrated on generating positive word of mouth by creating promotions and experiences that would cause consumers to share them with others. The goal was to control the topic of “water cooler” conversation at the office.

Traditionally, opinion leaders were a public relations firm’s focus; they still are. Opinion leaders are those unbiased experts with sufficient product knowledge to be valuable sources of information. In fields ranging from travel to computers to automobiles, the statements of one recognized opinion leader may carry considerable weight. Publicity experts seek such opinion leaders and offer them inducements to review upcoming products and services in the hope of generating positive word of mouth. The inducements range from free trials of products and services to outright gifts. Ideally the public relations firm should have no control over the reactions of third party evaluators who are free to report their opinions honestly. However, it is allowable for public relations firm employees to provide technical or other support to insure that the review is not negative because of a glitch in product performance or service, or evaluator error.

Developments in online reviews

The web has revolutionized the process of generating word of mouth. Traditional word of mouth was defined as a communication process in which friends discussed the benefits of products and services. If one person wanted a recommendation about a doctor or dentist, a good Greek restaurant, a hotel or a tourist destination, he or she would seek advice from a trusted friend. The friend usually had two characteristics of value: subject matter expertise, and credibility. Word of mouth served as a check against the trade puffery inherent in many ads. Consumers could ask questions about product and service characteristics not provided by advertising. They could also seek comparisons of one product against another, and gain information to help them make personal choices.

One relevant example is hotel choice at a tourist destination. As European discount air fares have proliferated, it is becoming more common for a resident of Dublin, Ireland to spend the weekend in Cracow, Poland. If there is no friend with subject matter expertise how might a Dubliner make the best Cracow hotel choice for his or her budget and tastes? The internet supplied the answer several years ago: online hotel and restaurant evaluations. The reviews are ostensibly from travelers who have paid for and experienced the hotel service or restaurant meal. The result is that consumers now accept the word of strangers as substitutes for the opinions of friends.

Users can search web sites such as Travel.com for information about travel destinations and personal evaluations supplied by users like themselves. They can get apparently unbiased information from travelers who have experienced the hotels, restaurants, and local events and use it as a substitute for word of mouth. Such information has even become popular locally, with consumers seeking information about local restaurants. The value of user generated evaluations has not escaped the industry’s notice. Now, numerous other web sites ranging from Amazon.com to CompUSA and others have incorporated user comments into their web sites. It is now common to see statements like, “Be the first to evaluate this product,” which is an inducement to share consumer opinions to support sales of web site products.

More important, social media have increasing clout because of their growing popularity and their characteristics, allowing easy reference to items like product reviews. Companies have developed their own social media web sites on Facebook, Twitter, and other less recognizable media. Recently, more than a few public relations firm have devoted themselves to the online review industry and social media. In the main, the reviews are credible.

Credibility – who are these consumers?

The ordinary consumer probably has little inkling that some of the unbiased consumer reviews are, in fact, managed by marketers working for online public relations (PR) firms. They seem to be the product of other ordinary consumers. Some web sites attract repeat comments by visitors and over time they build an image with others. The ultimate expression is the formation of an online community. However, there is a fear that marketers can subvert to communication process for their own purposes.

It must be said that thanks to a ruling by the US Federal Trade Commission (FTC) (www.ftc.gov/bcp/edu/pubs/business/adv/bus71.shtm) bias is largely absent from the industry. The ruling requires bloggers, reviewers and consumers who provide online reviews to disclose any ties to a company, product or service reviewed by them. So far, industry reports show broad compliance with a few exceptions that stand out against the others. One company was found to be manipulating reviews. It hid negative comments at the bottom of the list of reviews, on behalf of the organizations being evaluated. Reports are that the site lost credibility with consumers (Richards, 2009; Miller, 2009).

The FTC acted to insure that online reviews maintained the level of credibility that consumers expect. Moreover, an industry group, the Word of Mouth Marketing Association (WMMA) enacted its own set of ethical standards to try to avoid online review manipulation by marketers. WMMA executives note the fine line between acting ethically and aiding a client a bit too much. Online PR firms track their clients’ word of mouth on multiple forums and can identify dissatisfied consumers. They can, ethically, contact individuals and offer technical support or information in the hopes of gaining a more positive review in the future. They cannot buy them off and pay for a better review. The industry agrees that transparency is vital. One example concerns PR employees who monitor a discussion acting to clarify a misconception. They must clearly identify that they are agents of the company in question in their remarks. Alternatively, company comments must be cited with the term “Advertising”. The result is aimed at insuring that consumers are not confused by the source of the information. Failure to identify the user’s connection with the advertiser, risks damaging credibility.

Summary

Marketers will continue to market and adapt to changes in technology, society and other factors. As the internet has changed and provided new opportunities for promotion, marketers have adapted swiftly. Word of mouth is quite different than it was. It is reassuring that both government and an industry group support protecting consumers from misunderstanding or deception. They recognize that keeping the process open and transparent is the road to sustainability.

In our next issue, we will investigate other informative sites and invite readers to submit their favorite Internet sites for our consideration.

Reader requests

Please forward all requests to review innovative internet sites to: Dr Dennis Pitta, University of Baltimore, 1420 North Charles Street, Baltimore, MD 21201-5779, USA. Alternatively, please send e-mail to: dpitta@ubalt.edu for prompt attention.