An increasing interest and reliance on online reviews will see businesses spending more on paid social media ratings, but also a rise in litigation claims, Gartner has said.
According to the analyst company, paid social media ratings and reviews will make up around 10 to 15 percent of all reviews by 2014.
However, it warned that as a result of increased media attention on fake social media ratings and reviews, at least two Fortune 500 brands could find themselves in hot water from the US Federal Trade Commission (FTC) over the next two years.
Jenny Sussin, senior research analyst at Gartner said that as a result of over half of the internet’s population on social networks, organisations were “scrambling” for new ways to build bigger follower bases in a bid to generate “more hits on videos” as well as “garner more positive reviews than their competitors and solicit ‘likes’ on their Facebook pages.”
She said that to do this many marketing professionals had turned to paying for positive reviews with cash, coupons and promotions including additional hits on YouTube videos “in order to pique site visitors’ interests in the hope of increasing sales, customer loyalty and customer advocacy through social media ‘word of mouth’ campaigns.”
However, the company warned that this was shaky ground with some organisations who have opted to pay for phoney reviews could, and have, face “public condemnation” as well as monetary fines.
It gave an example from 2009 when the FTC determined that paying for positive reviews without disclosing that the reviewer had been compensated, meant deceptive advertising and would be prosecuted.
Gartner warned that companies therefore had to beware of the potential negative consequences on corporate reputation and profitability. It urged businesses to weigh the longer-term risks of being caught and the associated fines and damage to reputation and balance them against the short-term potential rewards of increased business.
The company also identified that as the FTC began to crack down on fake reviews/ratings, some reputation management companies were taking a different approach, not posting new, fake, favourable reviews, but identifying fake and defaming reviews and requesting the reviewers or host site remove them or face legal repercussions.
It said that as a result it expected a similar market of companies to emerge specialising in reputation defence versus reputation creation.
However, it pointed out that a crackdown in this industry could lead to consumers relying more on reviews and claims by companies.
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