sylleptic - mark hopwood’s blog

Yesterday, I read at Gizmodo that Reevoo (a leading provider of online review services to retailers) is warning shoppers to be careful when relying on reviews they read on the Internet. This might seem like an odd thing for a provider of reviews to be doing, but Reevoo’s business model involves pooling reviews across all its customers, and building its own brand as a trusted supplier of independent information, perhaps a bit like Which? Magazine. So Reevoo’s message can be translated as “our reviews are independent and reliable, beware other peoples’”.

I wrote last week about the benefits of consumer reviews on e-commerce websites: they help with search engine optimisation, and there is evidence they improve average basket value, conversion rates and return rates for many retailers. There is a real concern about the extent to which some retailers might edit unfavourable reviews, while others at the low end might just make up good ones. If 6 out of 10 consumers are strongly influenced by consumer reviews, there’s obviously an incentive for some to improve, or even manufacture, better feedback than they would otherwise receive.

This issue is on a continuum of questions regarding online trust. At one end we see trusted, peer reviewed academic writing, at the other unauthenticated random messages on Twitter, Facebook and Bebo, which might be inaccurate, slanderous or even criminal in some cases - the name of someone who might have been involved in a murder briefly appeared in comments on a Youtube video last week, according to this article.

Clearly you shouldn’t believe everything you read, and this is why trust models like ebay’s have become so successful. Tim Berners-Lee addressed the question at his lecture at the BCS in March. There might be better technical solutions on trust soon, but for now it’s not surprising that people are questioning consumer reviews. If Wikipedia can be amended by the CIA, to suit their world view, we should be careful before trusting anything we read.

One of the powers of a brand is to create that kind of trust for the information it provides. Would John Lewis fix its reviews? The reason most people would say not is that their brand is so strong. And that’s based on decades of hard work.

As part of its recent design upgrade, the team at Zoomf.com has introduced a very interesting new feature: the ability to search visually within a defined polygon on a map. Here’s an example.

Here’s how it works:

• Go to http://www.zoomf.com and start a property search (e.g. type in “NW3″ and press search)
• Once you’re looking at the search results, hit the visual search link
• Click the “add search area button” to start drawing your polygon
• Add each point you want as part of the boundary of your search area
• When you’ve finished, click back on your starting point

It’s beta software, but it’s clear it has stacks of possible uses, like keeping track of properties within school catchment areas, on specific bus routes, near your favourite chip shop… Given that you can save your searches and get an RSS feed of them, or even check them on your mobile, it’s set to be a very useful feature.

The Information Commissioner has ruled that bluetooth marketing isn’t subject to the Privacy and Electronic Communications Regulations 2003 and that marketers no longer need to get an opt-in before they send messages over bluetooth.

His ruling is here and the IPA guidance on the implications are here.

Essentially this ruling removes the legal protection people have from unsolicited bluetooth marketing messages, but that doesn’t mean that good sense shouldn’t be applied. Unwelcome messages have a negative effect on the recipient from a marketing perspective, so responsible advertisers are unlikely to descend into bluetooth spamming as a result of this ruling.

The IPA also pointed out that messages need to be suitable for all ages, especially since a greater proportion of under 18s probably leave their bluetooth on than is the case in the rest of the population.

This article at the Economist makes some very strong points about Facebook as a business, and is well worth reading. Given that the whole value of the company is in its right to market to its users, the value of that marketing really has to be thought through. Lots of people are predicting Facebook will be the next behemoth Internet business, comparing it with Google, but is this a valid argument?

One of the first creative directors I worked with used to talk about “mission marketing”, creating advertising that online consumers were responsive to because it helped them with whatever task they were carrying out. If they’re searching on Google, adwords are a perfect example of this, and that’s why they’re so successful. But you can do it in other ways too: mortgage calculators on property sites, entertainment for our downtime, even cleverly placed 468×60 banners can help users complete their missions.

But what’s our mission when we’re on Facebook? We’re catching up with friends, gossip, making plans for the weekend. Sure, some advertising might help us with that, but an awful lot of brands have nothing to do with this particular mission, and could easily be seen as a nuisance or distraction.

It’s certainly possible to develop clever campaigns that help people research their holidays, or swap tips on the best DVD player, or whatever, and to incorporate those in Facebook, but how scaleable is that model compared to sponsored search listings? How many Facebook apps will one person install and use? It seems pretty clear (and this is one of the Economist’s points) that the comparison with Google is specious.

Which takes me back to the valuation question: is Facebook really worth $15bn? When people value companies, they do it on the basis of long term expected return on investments. If I invest $100 in one company, instead of another, or a savings account, I expect my money back eventually, and I expect an income that is greater than I’d get elsewhere, especially if there’s some risk attached. A company’s value (number of shares in issue times price per share) is often worked out as a ratio to annual earnings or profit. British Airways, with earnings of $500m, is worth about $5bn, so the price/earnings ratio is about 10 (11.18 when I looked, but I’m simplifying!)

What do those numbers look like for Facebook? $100m in earnings this year, and a $15bn valuation based on the Microsoft deal, means it would take them 150 years to earn back their market cap. Obviously they’re expected to grow, but how much growth is possible? And will they be around for long enough to repay all this enthusiasm?

I was at e-commerce expo in London on Tuesday, speaking to technology vendors, listening to presentations, all the usual exhibition things. The e-commerce space is very complex: if you examine a typical modern online store, it has many components, probably including the following:

• a core e-commerce platform (perhaps ATG, IBM, MS Commerce Server, Demandware) which can have many features including promotions, the basket and checkout functionality
• a merchandising tool, which the retailer uses to organise how products are presented to consumers, and increasingly merging with search (all those named above have one, but Mercado and Endeca are well-liked today)
• analytics and reporting tools like Coremetrics and Omniture (and again lots of others bundle this in)
• product imaging solutions like Scene 7
• product review features,  perhaps from Bazaarvoice, Reevoo or Feefo

… and these are just some of the options. Throw in order management, fraud detection and payment handling… the vendor landscape is very complex, and there is a healthy economy in figuring out the best combination of products for each retailer, implementing it, and integrating it with their back-end systems.

A presenter from one company was talking about behavioural targeting on retail websites, which his product did, and which involves detailed, specific configuration of web pages, content on those pages and even the different routes shoppers take, depending on what we know about them, and what they do. (This is a terrible definition of BT, but it’s the one he used). He said that using his company’s product meant shoppers got the right offer every time, leading to massively improved conversion, sales and profits.

Another presenter talked about how his company’s consumer review features were the most important contribution to his clients’ success: consumers loved to read what others had said, and higher sales, lower returns, better search engine optimisation all followed.

It’s clear that the claims of the vendors are largely contradictory. Buying all their products can’t be the answer. They can’t all be right! So where is a retailer to start? I think the answer is in thinking about the consumer: what customer journeys are best for the company’s product or service, for their consumers and ultimately for their retail performance? And then to design the experience around those insights, choosing the right combination of vendors to support the consumers’ journeys.

Another critical factor to consider is integration: buying a stack of products from different people is only going to make putting all the pieces together harder. There might be specific examples where buying products from multiple vendors adds value, but this needs to be balanced with the ease of implementing a suite that has been built to work together.

Finally, as one speaker was very keen to point out, renting a hosted solution, where you pay a monthly, quarterly or annual rent for a service rather than operating it yourself, makes many companies a lot more agile than they would be otherwise. In my management consulting days I would always have to remind clients to consider the “buy, build or outsource” question, and that question is even more important today than it was then, because what we can build for ourselves has become so much more complex.