When you search for a product or service online, one of the first things you’ll come across are ratings and reviews. The more impressive a company’s rating, the higher it’ll appear on a Google search.
And the competition in this space is fierce — which is why there’s been an epidemic in recent years of fake reviews. A recent NBER paper found that for hotels, the most fake reviews came from small, independent operators competing against large branded neighbors. But now the dominant market players are starting to play the game.
Analysts at Gartner, an IT research company, predict that paid reviews and ratings will make up 10-15 percent of all reviews by 2014.
Analyst Jenny Sussman, from Gartner’s press release, says that:
“Many marketers have 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.”
The practice is actually illegal if undisclosed, counting as deceptive advertising. Gartner predicts that two Fortune 500 companies will be prosecuted by the FTC for the practice within two years.
Prosecution isn’t the only problem; stories about a fake review by a small business cause minimal damage, but the misdeeds of larger companies spark a great deal more outrage and negative media coverage.
If companies are drowned out by other’s paid positive or negative ratings, they’ll be under pressure to do the same or attempt to expose the practice by competitors.
It’s also risky for the hosts of these reviews. If it’s assumed that a large proportion of reviews or “likes” are fake, people will start to ignore them.