NEW YORK, April 16, 2015 /PRNewswire/ -- With online sales now eclipsing retail as America's favorite way to shop, consumers increasingly rely on online product ratings and reviews. But how did that product get that 5-star rating? A recent in-depth report by HomeWorld Business, a leading housewares industry trade publication, explores the role of "influencers" in swaying the score of online product reviews.
For example, an analyst on the investors research site Seeking Alpha noted that Keurig Green Mountain responded to low product ratings on its new Keurig 2.0 single-serve coffee machines by partnering with Influenster, which characterizes itself as a community of trendsetters, social media "hotshots" and educated consumers who deliver opinions. Influenster invites selected members to participate in exclusive rewards campaigns involving free products.
The United States Federal Trade Commission (FTC) has taken limited action against companies regarding disclosure in social media marketing initiatives, including the retailer Nordstrom Rack, according to the HomeWorld Business report. Nordstrom Rack changed its guidelines for endorsers after receiving FTC communication regarding a "TweetUp" event.
"Most housewares companies have dipped into social media marketing, but some have taken it a step further by cultivating 'influencers' who can improve a product's online presentation and ratings. This can be effective, but it's also risky, because people can question the integrity of initiatives designed to boost a company's position online," according to the HomeWorld Business report.
The HomeWorld Business report also examines how social media platform Village Green Network ran afoul of the FTC when some associated bloggers failed to identify compensation. This lead the company to revisit its business model and make major changes. The FTC is currently revising guidelines to tighten rules about endorsements such as those generated via Influenster and Village Green Network.
"I'm a fan of the FTC. I think what they're doing has to be done. The blogger/influencer world is like the Wild West right now. It's like the gold rush," Ann Marie Michaels, founder and CEO of Village Green Network told HomeWorld Business.
The report further explores the actual impact of influencer marketing programs and consumer expectations and interpretations of ratings. Amazon, for example, believes that the sheer volume of the reviews on its site is an adequate countermeasure to anyone who wants to "game" the system, an Amazon spokesperson told HomeWorld Business. Other online retailers with fewer reviews on a specific product may be more susceptible to influencers, the HomeWorld Business report concludes.
SOURCE HomeWorld Business