Mandatory Disclosure of Incentives for Online Product Reviews Benefits Both Sellers and Consumers, Lingnan Study Finds

HONG KONG, January 17, 2022 /PRNewswire/ — In a recent study conducted by the Department of Marketing and International Affairs of Lingnan University in hong kong, online product reviews with mandatory disclosure of inducements provided by advertisers, compared to voluntary disclosure, have been found to have a positive effect on review utility and sales, and are in the best interests of sellers and consumers. Providing new insight into the disclosure of incentives for online product reviews, these findings not only address the concerns of sellers, consumers, and regulators, but have broad implications for e-marketing, consumer well-being, and businesses. public policies in the platform economy.

As digital marketing continues to increase worldwide, online product reviews are becoming a key part of branding and promotion. To drive sales, many advertisers encourage reviewers to post positive reviews to influence consumer perception and purchase decision. Despite the legal requirement, most examiners do not disclose these incentives. It is commonly believed that disclosure of incentives has a negative effect on the credibility of product reviews, thereby affecting sales. Given the growing social concern about the responsibilities and obligations of online platforms and advertisers, as well as whether there should be clear guidelines for marketers and reviewers to disclose inducements, Lingnan University Researchers launched a study to examine the impact of mandatory and voluntary disclosures on review bias, usefulness, and product sales.

The study used product review data from Amazon.com, the largest and most popular online retailer that allows consumers to write reviews and buy products on the same platform. . A random sample of 388,319 reviews posted between January 2014 and June 2017 were studied, of which 47,203 notices included mandatory disclosure. The research team compared incentivized reviews to mandatory versus voluntary disclosure in terms of effects on review bias, helpfulness votes, and product sales.

Using data analysis and sentiment analysis, the study finds that mandatory disclosure is more salient than voluntary disclosure in the context of incentivized product reviews, leads to less biased reviews, and has the effect desired restriction on examiners. As indicated by the number of helpful votes they receive, mandatory disclosure leads to higher quality reviews, helps build consumer trust, which in turn helps increase product sales.

In contrast, voluntary disclosure or lack of disclosure may generate more favorable reviews, but inevitably raise consumer expectations and may result in disappointed customers. Increased consumer distrust with overly positive reviews will eventually hamper sales performance.

The findings suggest that online marketers need to think twice about nudging reviewers to more favorable reviews, as the relationship between nudged reviews and product sales is indeed not as straightforward as it seems. The findings also underscore the need for mandatory disclosure regulated by electronic platforms. If left unregulated, the informative value of online product reviews can be diminished or diminished, leading to a vicious cycle of consumer dissatisfaction to the detriment of online commerce.

It is recommended that platforms adopt mandatory disclosure for incentivized reviews, as this can make reviews more useful to consumers and ensure the authenticity and veracity of the information they contain, which in turn promotes the healthy development of the e-commerce and social selling.

The study was conducted by Professor Cui Geng, Assistant Professor Chung Yu-ho and associate professor Peng Ling of the Marketing and International Trade Department of Lingnan University in hong kong. The findings appeared in the recent issue of Business Research Journal.

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