AUTHOR: Russell TITLE: When Words Collide DATE: 11:51 AM ----- BODY:
There's certainly been a lot of buzz about the lawsuit against popular online business review site Yelp. Most of it is a misreading of the situation. What's going on in this lawsuit will not have any impact on those of us with business reviews of any kind, nor is it a "potential death knell" for online reviews as some are breathlessly claiming. What the Yelp lawsuit is about, pure and simple, is alleged extortion. The company suing Yelp is claiming it was told that if it advertised, negative online reviews would be hidden or removed, and if the company didn't advertise, the negative reviews would remain.

What this lawsuit does highlight, however, is something I have discussed previously: the inherent friction between user reviews and paid advertising. The case of Yelp points up an important but subtle distinction. Usually the issue is how a publisher can add user reviews to paid listings. In the case of Yelp, the question is how a publisher can add paid listings to user reviews. Same difference? I think not.

For the buying guide publisher, the business model is already established: companies pay for an enhanced presence within the buying guide. To add user reviews is not simple: advertisers want a positive environment in which to advertise. Don't expect a paid listing surrounded by negative user reviews to be renewed. Even the most enlightened advertiser will have trouble finding the value in that equation. There are ways to walk a fine line where reviews and advertisers can peacefully co-exist. Capterra was awarded a 2009 Model of Excellence award for, among other things, devising a successful approach to this. But the reason that a middle ground can be carved out is that user reviews are an additional feature for a buyers' guide. They are not the reason the buyers' guide exists.

Contrast that with Yelp. Yelp's success is entirely due to it achieving a critical mass of reviews. Users respond to it and value it because it lets users have their say - the good, the bad, the ugly. Yelp strikes an unabashedly consumerist stance. Without this positioning, which fostered a critical mass of reviews, Yelp would be just another also-ran in the highly competitive local business directory space.

So how does Yelp sell advertising? It can't be that easy. The business with glowing reviews could quite reasonably see no need to advertise. The business with horrid reviews could quite reasonably have no desire to advertise. Yet the moment Yelp starts fiddling or filtering its reviews to accommodate advertisers, it puts its business at risk. Nothing would kill Yelp faster than a general perception (amplified by social media of course) that it had "sold out." Bottom line: the reviews are not an additional feature; they are the product.

I don't see an easy answer to this one. If Yelp wants to succeed selling local business advertising, it's going to need to make compromises that one or more of its constituencies won't like. The strategy and its execution are both critical. And the object lesson is that it does matter which came first: the directory or the reviews.

Labels: ,

----- -------- AUTHOR: Russell TITLE: An Honest Opinion DATE: 3:41 PM ----- BODY:
In 2005, we gave an InfoCommerce Model of Excellence award to a company called ValueStar. We described it as a "for-profit Better Business Bureau," which doesn't capture all the nuances of the service, but gives you the general idea.

What stood out to us at the time was that while it relied heavily on user ratings, ValueStar went to extreme lengths to assure those that were rating a vendor had actually done business with the vendor. It seemed like overkill at the time, but with so many sites now drowning in user-supplied ratings (many of which are of suspect origin as merchants realize the power of their reviews), ValueStar's concept of validating user input looks prescient.

Last year, I wrote about another company, Tablet Hotels, which had announced it was adding user reviews. No news there, but Tablet Hotels upped the ante in the travel category by limiting reviews to those it could confirm had actually stayed at the hotel they were reviewing. While Tablet Hotels didn't publish the names of those who submitted reviews, it required that users identify themselves when posting their reviews. That might seem crazy to those publishers seeking to build a large volume of review on their sites, but I argued that Tablet Hotels was actually quite clever, because its approach removed all credibility issues while forcing users to take responsibility for their words by asking them to identify themselves.

Just yesterday, I was speaking with Mike Ortner of Capterra, an online buying guide for software. Capterra has gone where few publishers dare to tread: letting its users provide software reviews, including the products of its advertisers.

The process Capterra has devised is highly controlled. Users are required to identify themselves when providing a review, and their company names and job titles (but not their names) are published along with the review. It has purposely built a lengthy review submission form, the better to weed out those who are not serious and engaged. Capterra advertisers are allowed to preview all reviews of their products before they go live, and can challenge factual inaccuracies or reviews from users who aren't customers. There's much more to what Capterra is doing in the area of reviews, but my point here is a basic one: while all publishers are eager to have as many user reviews as possible on their sites, smart publishers are realizing that quantity at the expense of quality is a mistake. Reviews that can be trusted, submitted by responsible parties who are willing to identify themselves, have much more impact and value - even to advertisers, the group you would think would be least interested in seeing unvarnished reviews alongside their advertising programs.

Model of Excellence Awards


We are pleased to announce that Unigo LLC is a finalist for an InfoCommerce 2009 Model of Excellence awards.
Review Unigo's Model of Excellence profile here

Hear Unigo Founder & CEO Jordan Goldman at DataContent 09
DataContent 09: All Roads Lead to Data. Full program here.

Labels: , ,

----- --------