The Rating Game: Rise Of ‘Influencers’ Invites Challenge To Online Reviews

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As originally published in the March 2, 2015 International Home + Housewares Show edition of HomeWorld Business.

NEW YORK— Mass-market retailers, vendors and the service providers that support them recognize that, today, they have to face challenge and controversy by immersing themselves in marketing that employs social media to reach consumers who are employing new and rapidly changing means in seeking information about products and services.

Some, including Keurig, already have gotten a taste of how navigation of that particular communications channel can prove choppy, and others including Nordstrom, Inc. and Village Green Network, an organization active in social media marketing, have even had to deal with a United States Federal Trade Commission that is revisiting its approach to elements such as endorsements, in working out appropriate ways to conduct social media marketing.

Today, of course, most companies have dipped into social media marketing at least by having their own Facebook and Twitter accounts. Many have posted promotional and instructional videos on YouTube, too.

However, a critical and increasingly important element of social media marketing involves a group dubbed influencers. Social media participants who have developed their own followings online, influencers have established audiences and credibility with them, and, so, provide a ready and definable audience for marketers. Mommy and fashion bloggers are perhaps the best-known influencers. However, influencers today operate on any social network and are identifiable by the significant following for their posts, tweets and pins.

The effect of influencers corresponds to a well-recognized social phenomenon. For many years, marketers who wanted to drive grass-roots recognition of their brands and products targeted consumers they identified by terms such as thought leaders, opinion leaders and first adopters. What has changed is that social media has provided those consumers with an independent media that can take their notions beyond an immediate circle of colleagues, friends and family and into a broader and potentially more influential sphere.

The term influencer evolved as social media expanded, and people who were contributing to message boards and blogging became supplemented by those relating product discoveries on Twitter, and later Instagram, and mounting images of themselves first using a new item, initially on Facebook, perhaps, but also, now on YouTube and Vine.

Although it is potent, social media marketing that involves influencers comes with risk both in the response to a product and in how it is characterized by commentators.

Change & Challenges

The challenge marketers face is surrendering some control of marketing messages to online communities that may or may not act in the way expected. The dilemma can lead to controversy, particularly when observers question the integrity of initiatives designed to boost a company’s position in the social media universe.

In fact, change and challenges have recently prompted the United States Federal Trade Commission to revisit guidelines that have a direct impact on social media. One intention of the changes coming is to spell out more clearly how the FTC is enforcing endorsement rules as they apply to bloggers and others who are reviewing products after receiving compensation in kind or fees.

Keurig found one of its social media marketing initiatives held up to scrutiny lately but not by the FTC. The company has worked with a social media marketing organization Influenster to help it address poor reviews garnered by the recently launched Keurig 2.0 machine, one that uses technology to limit the K-Cup coffee pods it uses to authorized versions. Influenster is a community of bloggers and social media commentators who, in some instances, get free products and are encouraged to review those products online. Although Keurig and Influenster defended their practices, noting that reviews generated by the organization came with notification about their Influenster origins, some observers felt as if the vendor and its marketing partner managed improvement of the 2.0’s Amazon reviews versus the experience of actual purchasers.

For its part, the FTC is concerned that the online marketplace needs better standards for what it considers endorsements, a class of commentary, as far as the commission is concerned, that includes both celebrities and anonymous online reviewers.

Michael Ostheimer, an FTC staff attorney in the advertising practices division, who currently is drafting the updated guidance, notes that the commission began publishing standards for endorsements in the 1980s, before the Internet was an issue. The FTC updated the guidance in 2009 in fact, and did address issues regarding the Internet.

“But there were things we didn’t address back then,” he told HOMEWORLD BUSINESS®.

In fact, much of the direct discussion of Internet marketing comes in examples related to the guidelines section entitled Disclosure of Material Connections.

In setting the disclosure standard, the guidelines read:

“When there exists a connection between the endorser and the seller of the advertised product that might materially affect the weight or credibility of the endorsement, i.e., the connection is not reasonably expected by the audience, such connection must be fully disclosed.”

Ostheimer said new developments and complications in the social media world compel broad consideration as he drafts updated endorsement guidance. Reviews are among the factors he has been weighing.

“As the writer, it is one of things I intend to address,” he said.

Ostheimer maintained that he couldn’t yet say with certainty what the newly revised guidelines, which should be published some time over the next few months, will look like when they emerge. He said, however, that the FTC would address subjects that have generated complaints to the commission.

“There are a broad range of areas where there are issues, but the main issue is if someone is getting an incentive, whether something of importance or a monetary incentive, particularly if a person in an audience doesn’t normally expect that person to get an incentive. We have gotten complaints about intermediaries being involved in incentivizing people on social networks to write positive reviews. We’re addressing, in the guidelines, companies giving people free products to review. Even if they say it’s fine to write a negative or positive review, the consumer needs to know and has the right to know that the person doing the review got the product for free.”

Grappling With Guidelines

The revised guidelines may clarify issues regarding social media and endorsements, but the FTC has taken some limited action against companies it believes did not meet standards of disclosure in social media marketing initiatives, including the retailer Nordstrom Rack.

The Nordstrom division got what the FTC calls a closing letter, one sent when the commission detects a violation of its guidelines not of sufficient merit to warrant enforcement action at the time the communication is sent.

The letter, addressed to Nordstrom Rack, attorneys, pointed to an “inquiry focused particularly on the ‘TweetUp,’ a preview of the store opening of Nordstrom Rack Boise held especially for social media influencers on April 10, 2012. Nordstrom provided gifts, including a $50 Nordstrom Rack gift card, to the influencers who attended the event. We were concerned that Nordstrom did not tell the social media influencers whom it invited to the ‘TweetUp’ that, when they posted or wrote about the event, they should disclose they had received gifts for attending.”

Nordstrom, said Tara Darrow, a company spokesperson, responded to the FTC inquiry about the event by making changes to its own guidelines for endorsers.

“We did make some pretty quick adjustments,” she told HomeWorld Business.

Darrow said Nordstrom hadn’t spelled out disclosure requirements clearly enough to bloggers participating in the TweetUp event.

“We should have done a better job of that,” she said. “We did augment our endorsement guidelines on our website.”

The guidelines and their access proved sufficient reason for the FTC to issue a closing letter and not pursue enforcement action.

In another case, social media platform Village Green Network ran afoul of the FTC when some associated bloggers failed to identify compensation. The commission wrote: “We were concerned that VGN did not require that its network bloggers adequately disclose that they had received compensation from marketers, and, as a result, a number of bloggers in VGN’s network endorsed products in their blogs without adequately disclosing such compensation.”

Ann Marie Michaels, founder and CEO of Village Green Network, told HomeWorld Business, perhaps surprisingly, that she was “lucky” to have the FTC come knocking when it did.

“We learned a lot,” she said, even if it cost time and money in lawyer fees, because it led to her revisiting her business model and making a major change at Village Green Network operations, one that is preparing to launch.

Michaels declared she is a fan of disclosure and “I’m a fan of the FTC. I think what they’re doing has to be done.”

Working with the bloggers, who like to do things their own way, wasn’t always easy, Michaels said.

“The blogger/influencer world is like the wild west right now,” she said. “It’s like the gold rush.”

Despite informing them through video webinars, posted forums and emails that they had to disclose when they were compensated for posts, some VGN bloggers refused out of confusion about requirements or plain obstinancy, Michaels said.

She said that many bloggers don’t want to be identified with marketing, but she insisted they were looking at things wrong. In particular, younger consumers aren’t concerned about a blogger or other influencer getting compensation, as long as they are aware that the compensation is occurring.

“Millennials want authenticity,” she said.

Michaels said part of the problem has been that the FTC guidelines were vague and limited in scope, and she welcomed an update that is more direct and easy to communicate across the entire spectrum of social media.

The standard that the FTC is trying to uphold, and one Michaels supports, can be summarized in a word: transparency. The online community remains suspicious of someone, anyone, limiting free expression online. Yet, while they want standards set that ensure that interactions can’t be manipulated by interested parties, they are just as suspicious of government involvement on the web. So, even government watchdogs invite social media reaction if they suggest regulations that restrict access and/or content. So, transparency becomes an actionable standard. The FTC can safely insist that those who seek to influence the conversation online identify themselves and the methods they employ.

The Case Of Keurig

Keurig and Influenster both said they abide by the standard of transparency, but that didn’t stop their work together from coming under scrutiny when an analyst, commenting on the online investors research site Seeking Alpha, spotlighted Keurig’s work with Influencer, suggesting that it was to prop up a sagging response to the 2.0 brewer.

In a research note, Seth Golden, co-founder and chief market strategist for the Capital Ladders Advisory Group, writing in late December for the Seeking Alpha investors research site, said Keurig Green Mountain continue to receive an overwhelmingly poor response to the 2.0 on Amazon.com and Keurig Facebook page. The low grades on Amazon can constitute a particular problem, as the particularly robust review community there has become a research resource for many consumers thinking about purchasing a given product category or for a specific item.

Golden made the point that Keurig responded to the low scores by partnering with a consumer goods marketing company, Influenster. He pointed out that Influenster characterizes itself as a community of trendsetters, social media “hotshots,” as well as educated consumers who deliver opinions about products and experiences encountered in their everyday lives, meeting on the organization’s site to learn about new products from favored brands as well as review the products they already use in their day-to-day lives. Influenster invites its most adept and active members to participate in exclusive rewards campaigns, which includes sending them what are called VoxBoxes that contain free products.

Golden wrote that Keurig Green Mountain partnered with Influenster to influence consumers on the 2.0 product line, providing free Keurig 2.0 products they could use for blog fodder and, if so inclined, review. He expressed suspicion about the process and its integrity, writing, “Not for nothing, but if I received a free Keurig 2.0, that would certainly bias my review of the product.”

He noted that Influenster member reviews on Amazon boosted what had been a two-star rating to 2.5 stars.

Golden told HomeWorld Business, when generally favorable Influenster member reviews began to appear, other ratings remained in the two-star range.

Although he pointed out the Influenster effect on Keurig 2.0 Amazon ratings, Golden conceded that, at least so far, “taken on a whole, it’s not meaningful” because the poor reviews continue to hit the retailer’s site.

Where Influenster can deliver a more important boost for Keurig is on other e-commerce websites.

“They’ve taken a second step and uploaded all the Influenster reviews, 90% four star or better, and supplemented those on Bed, Bath & Beyond and other e-retailers where reviews don’t populate as frequently as Amazon. There, they’ll see a different impact than on Amazon.”

For its part, Amazon believes the sheer volume of the reviews on its site stands as an adequate countermeasure to anyone who wants to “game” the system, or so spokesperson Brent Avila told HomeWorld Business.

He said ratings and reviews are important to Amazon, although he said that low ratings aren’t a major factor in removing an item from the site. More important are sales and partner factors such as defect rate. Ratings play in only when a product becomes marginal based on the major considerations.

Like others who have to deal with social media issues, Amazon is reluctant to influence the review system, even on its own site, as that seems as it if was making arbitrary decisions based on a particular corporate agenda.

“Amazon takes a relatively hands-off approach,” Avila said.

For its part, Keurig made a point that Influenster emphasizes in discussing how its organization functions: No one tells members how to review products nor rewards or penalizes them for bad reviews.

Yet, in the aftermath of Golden’s commentary, Keurig social media efforts with Influenster emerged in its most recent conference call with financial analysts.

In the February 4 conference call, Bryan Spillane, a Bank of America analyst, asked Keurig president and CEO Brian Kelley if Keurig is “actively trying to bend some of the trends and reviews” in its work with Influenster.

Kelley responded, “We don’t try to bend reviews or alter reviews. We do send brewers to people and we ask them to review them. Some would review it well, some wouldn’t review it well, but we don’t in any way or activity prompt them to give a score that would at any way change the number. But we do give them to influencers, we provide brewers, and then we have the risk like anybody would of having them like it or not like it. But it’s an objective point of view, it’s their point of view, it is not ours.”

Influencing The Influencers

Influenster, itself, said that its organization isn’t designed to actively create a designated result. Rather, it is a community that gives people a voice about products that is “amplified” by social media, said Nicole Cammorata, content marketing/editorial manager for Influenster.

She said Influenster brings together bloggers and other social media participants into a community where they can discuss products and related topics that spark their interest. Influenster members are rewarded for their degree of participation and how much of a following they have. On that basis, some are selected for Influenster’s VoxBox program, which provides them free products that they then discuss in their social media outlets.

Cammorata said that Influenster does provide tasks to its VoxBox program participants, including review writing, that influence their standing and participation in the VoxBox program. However, she insists that Influenster tracking of member participation does not include whether their reviews are positive or negative.

“You can earn badges for your profile based on activity,” she said. “With Keurig, for example, members could earn the Keurig badge by writing reviews, through posting photos. If they accomplish the tasks, they get badges that are on their profile, and that’s something people on the site love.”

Influenster it seems intends its organization to be a resource to marketers, not a driving force for their messages but, rather, an online location where they can win recognition from a critical and influential part of the social media community. Marketers can evaluate responses their products prompt, shortcomings and benefits, gaining insight into the broader reception it is likely to get even as work about their wares spreads through and beyond the community.

As regards to how Influenster works, the process of assigning VoxBoxes isn’t completely random and the organization does look at member preferences when making determinations of who gets what. In the Keurig example, the company looked at its own member research to determine who were coffee drinkers and active on the site.

“We encourage honest reviews,” Cammorata said. “We’re asking our community to complete those tasks, not telling them what to say. They can write a review that says they don’t like a product and that will complete one of those tasks. They do have to disclose they got the products free from us but otherwise we don’t tell them what to say.”

Influenster’s approach to social media marketing, the organization and Keurig have affirmed, doesn’t involved rewarding particular reviews, and so does a participant on the organization’s site independently contacted by HomeWorld Business.

Anastasia Loper said advancing in the community comes from “doing reviews, either on Influenster itself or Walmart, Amazon or Target” websites.

She added, “as for my reviews, they’re the same as they’d have been had I gone out and purchased the product myself. I feel that companies are looking for genuine feedback on their products, whether that’s good, bad or ugly. I do however feel that Influenster has opened my eyes to products I wouldn’t have been likely to pick up on my own.”

Still, when specifically asked if the way she regards free products might be different from how she considered purchased products, she said, “I think that people who get something for free perhaps value it a little more. I know that when I buy something, unless it’s really underperforming or the greatest thing ever, I don’t post my opinion. If I’ve gone out and purchased a product, it has to be really good or bad for me to spend time going onto Amazon or Target and posting a review.”

Mark Neckes, a marketing consultant, retired professor and past chairman of the Johnson & Wales University marketing department, who holds a degree in behavioral psychology, noted that people who get a product for free do tend to evaluate it differently than they would something they paid to obtain.

In an example from his own life, Neckes noted that he wanted a tablet computer but regarded the price of an iPad as too high. Then he won an iPad in a contest and considered it as “fantastic. But if I got one paying $500, I’d be asking, why? As I can get a Galaxy tablet for $199.”

In fact, when time came around for him to purchase a tablet for his wife, he didn’t choose an iPad but a Kindle that cost $129. “It does the same thing as the Apple, not as easily, but it still does the same stuff,” Neckes said.

In effect, consumers may evaluate products not only in terms of how they perform but against the basic performance promise but also against how much competing products cost and even against the opportunity cost, as in, should I have spent $500 on a tablet versus a weekend retreat.

Not all organizations promoting social media marketing think prompting reviews among their associated influencers is a good idea. TapInfluence, which operates the site Influencer.com, an operations separate from Influenster.com, doesn’t encourage bloggers and other influencers in its community to get involved in the review/ratings process as part of their participation.

“That’s actually not the business we’re in,” said Holly Hamann, co-founder and chief marketing office, TapInfluence. “We distinguish what we call influence marketing and reviews.”

Hamann noted that her company puts brands in touch with influencers who are a good match to the client’s message. She noted that brands can find organizations that will generate reviews based on promoting messages as specific as one contained in traditional advertising .

“That’s advocacy marketing, not influencer marketing,” she said. “We’ll match brands to influencers who are a good fit to the brand values, and, so, we’re matching them to an audience that already is relevant. We don’t encourage people we work with to do straight up reviews.”

Hamann said transparency is critical, particularly because consumers need the ability to make determinations about who is delivering a message and what their motivations might be. For marketers, getting used to social media as an informational conduit is difficult because it is diverse and constantly changing. However, because of its nature, trying to be too clever can have unintended consequences.

“For the first time, consumers know more about a marketing channel than brands do,” Hamann said. “The brands have to bring consumers into their marketing. Consumers want more information to make decisions with, and not necessarily from brands but from peers. The shift is to collaboration.”

The Influencers: An Evolving Industry

NEW YORK— Influencers, said Holly Hamann, founder and chief marketing officer at TapInfluence, are a group of people who started out for the most part as bloggers and the mostly female pioneers had topics of interest rather as initial motivation.

“They wanted to share a journey, share tips, they started building their own communities of people,” Hamann said. “All of a sudden, when bloggers were getting 50,000 unique visitors a month, someone came to them and said, ‘I can run an ad on this blog.’ Now, you had bloggers who could make six figures because the traffic was so high. That’s starting to shift. There are no banner ads on mobile sites. As other platforms popped up, advertisers realized that banner ads generate impressions but don’t create influence.”

As social media participants developed big followings on platforms such as Twitter and Pinterest, marketers had to figure out how to use vehicles incompatible to established online advertising. Yet, the content producers and the marketers realized that many social media participants were building audiences that had marketing potential, Hamann said.

Bloggers emerged as influencers as social media expanded and marketing opportunities with it. Organizations such as TapInfluence, Influenster and Village Green Network, among others, launched as a consequence. Their mission has been helping marketers find influencers without having to do endless Google searches for those social media notables with audiences suitable to their messages. Each, in a somewhat different way, links marketers with suitable social media content providers and helps to ensure that overly aggressive marketing doesn’t erode the value of the process, although their approaches contrast.

“With influencing, the challenge is to build up a brand in a way that doesn’t undermine the authentic relationship with the audience. The [audience]needs to know when the influencer is being compensated,” Hamann said. Consumers, particularly younger consumers, aren’t put off by the idea that their peers are compensated for social media efforts as long as they are informed about any reward relationship, she noted. In social media, Baby Boomers are the most skeptical of online content and suspicious of commercial entanglements. Younger consumers, in contrast, expect financial relationships to develop in that they have grown up with the notion of online entrepreneurship.

As the Internet has become more established, consumers accepted digital advertising on their favorite sites and the idea that a blogger or someone they follow on Twitter might get a free product or concert pass to prompt a tweet. That acceptance, however, requires that an influencer inform followers about what the content provider receives from a marketing partner, and that subsequent evaluations are consistent with what has come before, Hamann said.

Many consumers, “are looking for useful information, and they don’t care where they get it from as long as it’s authentic to the influencer,” Hamann said. “They don’t care when the content is authentic and transparent. They still consider the content to be valuable. Championing brands and not disclosing can erode confidence.”

She added that the interest social media advertising is drawing from the FTC is “interesting.” The FTC response to consumer feedback, including its effort to update endorser guidelines, demonstrates that the audience and regulators do value social media and the influencer community as its role has advanced, and that they will respond to protect them.

 

Influenster Platform Pairs Brands With Consumers

NEW YORK— In detailing the benefits the organization offers marketers, Influenster emphasizes its ability to connect clients to audiences that match their needs, Jia Marquez, a company senior account executive, told HOMEWORLD BUSINESS®.

“A major benefit of partnering with Influenster is that clients are able to connect with the exact consumers that they’re trying to reach. We currently have over 600 data points per member, anywhere between age, income and ethnicity to where they shop, how much they spend, what brands they use, etc. With this information we can get really granular in terms of who our clients are trying to reach. When our members sign up, they also connect all of their social accounts— i.e. Facebook, Twitter, YouTube channels, blogs, etc.— so again we’re collecting a lot of data in terms of who their social following is and what they talk about on social,” said Marquez.

Influenster said it is a gamified platform, so, added Marquez, “We create ‘Brand Challenges’ for each campaign which outlines various tasks where clients are looking to drive activity i.e. like/follow on social, share photos, write reviews on brand/retail website, create blogs/vlogs, etc. This is so that we can streamline the activity of our members to the platforms that are most important to our clients.”

Influenster offers customer access to members of its community, Marquez said, real people who “are talking about real products. They definitely give an authentic voice and conversation surrounding our client partners, and you can really trust them to give their full and honest opinions about products that they’re testing and experiencing. Our ultimate goal is for our members to become brand loyalists to the products they receive, and we encourage them to create social activity across social media platforms so that their networks become purchasers of the products too.”

As for results, Marquez stated that Influenster clients can expect a marketing campaign launched through its members to generate thousands of posts across a range of social media platforms that can reach millions of consumers, and so, provide rapid impact.

“We also offer detailed insights reporting post program, which includes information such as prior usage and awareness, brand perception, what they like/dislike about products, competitive analysis, etc. So not only are we generating social content, but we’re also giving feedback to our clients post-program,” she said.