Share with your friends










Submit

Analytics Magazine

Paying for online reviews backfires among socially influential

Online user reviews have become an essential tool for consumers who increasingly rely on them to evaluate products and services before purchase. The business models of online review platforms such as Yelp and TripAdvisor and e-commerce sites such as Amazon and Expedia critically depend on them. Should such sites pay users to encourage them to write reviews?

According to a forthcoming study in the INFORMS journal Marketing Science, a leading academic marketing journal, that is a bad idea. Paying users suppresses the number of reviews on social platforms, especially among those users who are socially well-connected and likely to be more influential.

The study, “Motivating User Generated Content: Social Connectedness Moderates the Effects of Monetary Rewards,” is authored by Yacheng Sun of University of Colorado and Tsinghua University, and Xiaojing Dong and Shelby McIntyre of Santa Clara University.

The authors examined user response from a sample of customers following the introduction of a monetary payment program for user reviews by a social shopping platform in China. The payment was roughly the equivalent of 25 cents per review in credit for purchases from sellers affiliated with the platform. To the company’s surprise, the number of user reviews declined by more than 30 percent in the month after the payment program was introduced, relative to the month before.

“The familiar ‘Law of Supply,’ that implies supply increases in response to higher prices, does not seem to hold true when it comes to paying for reviews on a social platform,” said Sun.

The paper explores why reviews drop in response to the monetary payments. The authors conjecture that the drop in reviews could be the result of community members’ concerns that their honest reviews – motivated by an intrinsic motive to either help others with relevant information or to present themselves as knowledgeable about the product or service – may now be interpreted by the community as simply driven by the less honorable extrinsic motivation of making money. If this were true, the drop in user reviews would be greater among users who had more friends on the social network, who could potentially misinterpret the user’s motivation for writing reviews.

The authors empirically test their conjecture by comparing the change in reviewing behavior among “socialites” (more than five friends on network) against “loners” (no friends on network) after the introduction of the payment scheme. Indeed, the reviews from socialites drop 85 percent, from just over 0.4 reviews a month to just under 0.06 reviews a month. In contrast, the loners who had little to lose in terms of social capital, increase their reviews from close to zero to about 0.03 per month. The increase in reviews from the loners, however, does little to offset the massive drop among the socialites, who are the heavy contributors overall. Hence the aggregate drop of 30 percent.

“Nobody wants to be seen as a paid shill for brands, so the users with more friends and followers, who were likely more influential and wrote more originally, are the ones who stop writing. A real double-whammy,” said Dong.

“Our results support the approach of industry leaders like Yelp or Amazon, who do not compensate for reviews. In fact, they tap into the intrinsic motive for social recognition through status badges for frequent contributors,” said McIntyre. “There may be still ‘under the radar’ ways to pay only the less socially active users for their reviews, but such targeting can be risky as the heavy reviewers may perceive it to be unfair and therefore stop writing reviews, if and when they learn about it.”

Marketing Science is a premier peer-reviewed scholarly marketing journal focused on research using quantitative approaches to study all aspects of the interface between consumers and firms. It is published by INFORMS, the leading international association for operations research and analytics professionals.

 

Related Posts

  • 75
    E-commerce platforms such as Uber and eBay, which link sellers and buyers, face the perennial dilemma of what is more lucrative, supporting the needs of the buyers or the sellers. The traditional belief has been that it is more important to focus on buyers, who create demand, than on sellers.…
    Tags: e-commerce, marketing, informs
  • 58
    Among the many factors that impact digital marketing and online advertising strategy, a new study in the INFORMS journal Marketing Science provides insight to a growing trend among firms and big brands: weather-based advertising. According to the study, certain weather conditions are more amenable for consumer responses to mobile marketing…
    Tags: marketing, science, informs
  • 56
    Can responding to online reviews improve a business’ online reputation? According to a forthcoming study in the INFORMS journal Marketing Science, management responses can not only lead to higher ratings for businesses but also more informative reviews. 
    Tags: reviews, science, marketing
  • 54
    FEATURES ABM and predictive lead scoring Account-based marketing, and the related technology of predictive lead scoring, is dramatically changing the face of sales and marketing. By Megan Lueders Software survey: joys, perils of statistics Trends, developments and what the past year of sports and politics taught us about variability and…
    Tags: marketing, science, informs
  • 54
    FEATURES ABM and predictive lead scoring Account-based marketing, and the related technology of predictive lead scoring, is dramatically changing the face of sales and marketing. By Megan Lueders Software Survey: Joys, perils of statistics Trends, developments and what the past year of sports and politics taught us about variability and…
    Tags: marketing, science, informs

Analytics Blog

Electoral College put to the math test


With the campaign two months behind us and the inauguration of Donald Trump two days away, isn’t it time to put the 2016 U.S. presidential election to bed and focus on issues that have yet to be decided? Of course not.


Headlines

Three keys for organizations to gain value from information

In the current information-driven society and increasingly digitalized world, Gartner, Inc. says that sentiments are shifting from the economics of tangible assets to the economics of information – “infonomics” – and other intangible assets. Infonomics is the theory, study and discipline of asserting economic significance to information. It strives to apply both economic and asset management principles and practices to the valuation, handling and deployment of information assets.  Read more →

Burtch Works study on ‘Salaries of Predictive Analytics Professionals’

According to the recently released Burtch Works study on “Salaries of Predictive Analytics Professionals 2017,” senior-level executives saw the largest increase in salaries from 2016 to 2017, and industry diversification of employment has diluted the concentration of such professionals from financial services and marketing/advertising to consulting and technology. Read more →

New study asks, ‘Is your business AI-ready?’

Despite fears that robots will replace human labor, the majority of artificial intelligence (AI) leaders (79 percent) expect their employees will work comfortably with robots by 2020, according to a new Genpact survey of C-Suite and senior executives titled, “Is Your Business AI-Ready?” Read more →

UPCOMING ANALYTICS EVENTS

INFORMS-SPONSORED EVENTS

2017 Winter Simulation Conference (WSC 2017)
Dec. 3-6, 2017, Las Vegas

CAP® EXAM SCHEDULE

CAP® Exam computer-based testing sites are available in 700 locations worldwide. Take the exam close to home and on your schedule:


 
For more information, go to 
https://www.certifiedanalytics.org.