Off The Grid PR

A simplified but still useful view of today's E-commerce environment is that the world is divided into two discrete spaces: Places that sell and Places that provide news, reviews and ratings of the products or services for sale. Much of the PR (public relations) world infrastructure is in fact dedicated to connecting these two spaces, whether the reviews & ratings are from traditional print and broadcast, industry influencers, customers or new media such as blog pundits, social networks or podcast shows.

WOM as a Sales Supermagnet

Within the past three years or so, there's been a growing awareness of the role of Word of Mouth or WOM as an influence  in customer purchases. And it isn't just any mouth that matters. There's a growing mass realization that WOM in the form of recommendations and testimonials from friends, family and co-workers may serve as a form of sales supermagnet, pulling forward a customer buy decision.

Here are some examples of data supporting the view of WOM as a sales supermagnet:

•  According to a 2006 survey of by the Annenberg School of Communications and PR firm Ketchem, advice from friends and family is used by nearly half (43.7%) of consumers, while nearly one out of four (or 23.2%) follow advice from co-workers. The slide shows the strong impact of friends and family across a wide range of buy decisions (though significantly, not your cousin Harvey's stock tip to you)

• A study by e-marketing expert, MarketingSherpa, cites that 86.9% of consumers say they trust a friend's recommendation over a review by a critic.
• As described by the Center for Media Research, a recent survey by Deloitte Consumer Products Group finds that 62% of consumers read consumer-written online reviews - and significantly- 7 out of 10 pass this information onto family and friends.

As of a few months ago, the most popular application on Facebook was ilike. iLike’s music application enables Facebook users to:

• Learn when one of their favorite artists is going on tour in their area, and see who among their Facebook friends will be attending.
• Search and add streaming music from their favorite artists to their Facebook profile.
• Discover new music by following what their friends like and via personalized recommendations of free MP3s.

Today's Rule-Changer: BazaareVoice's ShareThisTM

Enter: The WOM Supermagnet, tunneling customers from product review spaces to product sales.

In an Oct 19th press release, BazaarVoice launched ShareThis, a new service complementing their enterprise social commerce  platform. (BazaareVoice's software enabling product reviews is already in use by the likes of Dell, Macy's, Overstock.com, PETCO, QVC and Sears.)  In a nutshell, ShareThis is an app that integrates onto a retailer's product page within the review summary, as well as with each specific reviews. Consumers can click on a ShareThis icon to publish any review - their own or some else- to Facebook, Digg or del.icio.us. The published review includes the retailer's logo and the review itself, as well a direct link back to the retailer's web site.

What Rules Will It Change?

Applications like ShareThis and other social media apps promise to change the boundary between reading reviews of a product and purchasing it, directly transporting a reader from awareness and education into the purchase experience.

And indeed there's a lot of market. Only 25 percent of online retailers have incorporated customer reviews on their e-commerce sites, according to a January 2007 Forrester Research report. (The low adoption is because many e-tailers fear losing control over their marketing messages.)

Exactly What will it Change?

We believe apps like ShareThis, or more realistically, the open source clones that will follow, have the capability to trigger a host of market changes.

• Proliferation of Consumer-generated Product Reviews. It will become common for an online purchaser, post two weeks after a product purchase, to receive an email including a widget,  inviting them to post a review, enticing other prospective purchasers to cross the line.
• Review Sites lose Ad Revenue. Because of this fundamental sea change, there will be less necessity for sellers to solicit formal expert reviews, forcing a contraction in the advertising spending on formal review sites.
• Ecclipse of Blog Punditry. In this not-so-distant future, with so many genuine customers now enabled to post their reviews, we anticipate lower influence for blog pundits who currently hold much sway in product reviews.
• Rise of Authenticators. Related to the above, we believe there will be increasing necessity to establish the authenticity of posted reviews, hence we expect the market for 3rd party clearing houses providing authentication systems verifying the credibility of reviewers, making transparent the identity of 'paid for' commenters. (To a certain extent,we have already seen this emerge in systems like the Technorati 'authority ranking' of posters - still vastly unexploited yet.)
• "Blink and It's Gone" Product Cycles. Finally, with the  capability for the "real scoop' on a hot new product or service being so widely disseminated, sales cycles of products are expected to shorten.  (The good news is faster uptake and market penetration; the flip-side is still newer, hotter competitor's products also come up on the radar more quickly).

But We Already Knew All This!

In some ways, there is nothing new here. The buzz is on that buzz is working. Readers of Gladwell's The Tipping Point are familiar with the concept of 'mavens', people who set cultural trends, who know what's cool before the rest of the world even knows it exists. Or 'connectors', people with immense rolodexes, who can spread a trend extremely widely and quickly. And of course, the sales power behind "people like me" reviews has been well appreciated since Amazon's succcessful software feature, "People who bought this book also bought...". Simply put, consumers have a keen interest in what people like them (or who'd they like to be) are buying.

 In a social media network setting, the viral spread of purchasing excitement has in fact become a core goal on online retailers. The success of Woot.com and Stylehive.com amply demonstrates the point: When surrounded by a community of "think-alot-alikers", a pre-purchaser's uncertainty and doubt can be gloriously swept aside in a wave of enthusiasm, a rapid flow of information including knowing "what's truly cool", all culminating in a purchase partially motivated to be cool too. For what some of these retailers have learned is that there's a double cachet: Buy a cool product and you can  turn your friends onto the product. (Voila- you're a maven!)

For marketers, what is different  about the new conversational marketing tools and what promises an exciting new e-commerce future is simply this: The space and time between learning about a product and buying it is contracting rapidly.

Related Links:

Bazaarevoice ShareThis^TM press release

'Reinforcing the Blockbuster Nature of Media': The Impact of Online Recommenders (Knowledge@Wharton)