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Advertising and online consumer reviews

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LaptopWith the increasing influence of online consumer reviews (OCRs) on a consumer's decision making, online sellers have begun to embed the OCRs in their advertisements.

The results from a recent study show that the greater the perceived credibility of OCRs among potential consumers, the higher the purchase intention. When trust in an online shopping site is high, consumers' purchase intentions influenced by OCRs alone are more favourable than those influenced by OCR-embedded adverts (OEAs).

For practitioners, the study is useful in determining which type of OCR is useful for marketing, depending on the trust in online shopping sites, and could also aid in the development of an e-commerce strategy using OCRs.

Online consumer reviews (OCRs) explained

With the exponential growth of e-commerce, consumers create a huge amount of information which influences other consumers. Amazon and eBay are prime examples of this. OCRs are part of the consumer-created content posted by web site users who have already bought the target product. OCRs contain information about and recommendations of the products from the consumer's perspective. Recent studies have investigated OCRs as electronic word-of-mouth (eWOM) that influences consumer behaviour.

Online sellers have discovered the effect of OCRs and they can use them without incurring a cost. While traditional advertisers select people and interview them regarding their personal experiences, online advertisers merely quote the body or certain parts of OCRs that have been posted already.

Credibility of and challenges to online consumer reviews

Consumer endorsement in advertisements is of three types: celebrity, expert, and typical consumer endorsements. The audience is persuaded through the informal influence of the process of internalization. Internalization occurs when the receiver adopts an attitude because it is useful for the solution of a problem or is demanded by his or her value system. Further, internalization occurs if reference groups are considered credible. Consistent with this view, information from high-credibility sources is likely to be more easily accepted. Credibility includes expertise and trustworthiness. Expertise is defined as the perceived ability of the source to make valid assertions, and trustworthiness is defined as the perceived willingness of the source to make valid assertions. The model indicates that sources exhibiting expertise and trustworthiness are credible and persuasive. Further, trustworthiness positively influences consumer attitudes toward a brand, consumer intentions, and their purchase behaviours.

Prior research has suggested that OCRs are likely to be more credible than seller-created information. On the other hand, several researchers suggest that there exist some challenges related to customer-created information. These challenges are related to online identity and feedback operating perspectives. In the online identity perspective, online identity can be changed easily in an online environment. This leads to various forms of strategic manipulation. Community members can build good reputations, take advantage of this by cheating other members, and then disappear and reappear under new online identities and clean records. Moreover, they can use fake online identities to post dishonest feedback; thus, attempting to improve their reputation or tarnish that of their competitors. In the feedback operating perspective, the questions are related to the trustworthiness of operators. Web sites may delete some reviews from their web site or repeat reviews depending on their purposes. Therefore, the influence of OCRs may be dependent on the credibility enjoyed by the web site.

“As a website gathers credibility and accumulates a larger number of OCRs, using OCRs in advertisements becomes unnecessary.”

Trust and its transfer

Trust is the most important factor in online business transactions. When the trust in a site is low, there is no significant difference in consumers' purchase intentions irrespective of whether an OCR is located within the advertisement or not. Conversely, when the trust level is high, OCRs provided on the web site are meaningful and influence consumers' decision making and purchase intention. These results support previous studies that investigated trust in online web sites and how it is essential for the success of e-commerce.

The study also tested the transfer of trust from sites to consumer reviews. It was found that trust is transferred from sites to the credibility of OCRs more than it is to OEAs. In other words, trust influences the credibility of OCRs, whereas the credibility of OEAs is not influenced by this factor. This implies that potential consumers perceive the link between a website and OEAs as being rather weak.

The study also introduced another perspective – that of how trust can be built in a person-to-person context in a web environment. As individuals are exposed to a huge amount of information and the expansion of their participation is changing other people's behaviour, more research efforts are now being spent in exploring the effect of trust in a person-to-person context in a web environment. Although a huge amount of research has focused on building trust for electronic markets through trusted third parties or intermediaries, it is not applicable from a consumer-to-consumer perspective.

Previous studies suggested the building of trust in the person-to-person and person-to-medium contexts in a web environment, such as reputation systems, through social control by utilizing community-based feedback regarding past experiences of consumers to make product recommendations. These studies also suggested the establishment of a trust supporting framework to overcome the challenge of creating such a reputation-based trust mechanism. However, according to this most recent study, these trust-supporting mechanisms have different effects depending on the web environment.

For example, current research indicates that trust and reputation systems among consumers used in commercial and online applications have serious vulnerabilities, and it is obvious that the reliability of these systems is occasionally questionable. In such cases, devising various methods for increasing the trustworthiness of web sites could enable the reputation system itself to become more trustworthy in terms of not only improving the web site's reputation but also highlighting the web site's efforts such as providing additional information (e.g., various reputation results using new techniques or mechanisms). Moreover, the visual aspects of a web site's efforts to build trust could be a new approach to influencing the establishment of person-to-person trust.

Implications for practitioners

Our findings have important business implications to online marketers who follow the strategy of Amazon.com in terms of collective intelligence. Web sites may believe that individuals undoubtedly trust OCRs more than seller-created information, and the OCRs are effective in influencing consumers' purchase intention. However, this study reveals that OCRs do not have the same effect on consumers' purchase intentions. On the contrary, only trustful web sites actually benefit from customer-created information such as OCRs. Therefore, these findings could encourage the development of an e-commerce strategy using OCRs. In the initial stage of e-commerce, online shopping sites are not popular and have few or no OCRs because of a lack of customers. In this stage, a steady increase in the number of positive OCRs could be a good sign of trust. However, it is difficult to increase the number of reviews quickly in the initial stages of a business.

Moreover, before the web site actually enjoys some degree of trustworthiness, it is possible that people consider the positive reviews to be fake ones. The results of this study indicate that in such a situation, OEAs are a wise decision because they are barely influenced by trust in online shopping and influence a consumer's purchase intention in a manner similar to OCRs. Further, advertisements use official space that is promoted freely by sellers. Thus, sellers can use OCRs that are available in other web sites. It is easier to quote OEAs than collecting OCRs in its own web site, and this will provide an instant trustworthiness to the website in the initial stages of its business. With this strategy, the managers of online shops can continuously improve the trustworthiness of online shopping sites. Moreover, online shops must ensure that consumers trust the site by emphasizing their stable transactions using escrow service and recommendations from third parties. As a website gathers credibility and accumulates a larger number of OCRs, using OCRs in advertisements becomes unnecessary. The greater the trustworthiness of online shopping sites, the greater the persuasion power of OCRs. Therefore, the positive impact of OCRs on consumers' purchase intentions could provide online shopping sites with a good opportunity for increasing sales.

June 2011.

This is a shortened version of “The different effects of online consumer reviews on consumers' purchase intentions depending on trust in online shopping malls” which originally appeared in Internet Research, Volume 21, Number 2, 2011.

The authors are Jumin Lee, Do-Hyung Park, and Ingoo Han.