How Online Reviews and Product Information Are Fundamentally Changing Local Marketing

imagesFor decades, awareness and familiarity, more than anything else, drove what consumers bought and where they shopped. They stayed at a Hilton over a small, but exceptional, boutique hotel because they knew what to expect with the chain. They drove 30 minutes to a Home Depot to find a particular tool instead of shopping at an independent hardware store because they knew it would be in stock.

But that’s changing. Thanks to growth of crowdsourcing communities like Yelp, new retail technologies, and the rapid adoption of mobile devices, consumers can access near perfect information about the local marketplace anytime, anywhere. They can find a hotel nearby, check its prices, compare reviews and determine quality — all in a matter of seconds. They can find out in a moment from their smartphone where the tool they’re looking for is in stock. The traditional role of the brand as an indicator of quality is becoming increasingly less important, opening the door for a world of smaller, more boutique suppliers capable of bringing a better product to market without spending billions of marketing.

In a new book, “Absolute Value: What Really Influences Customers in the Age of (Nearly) Perfect Information,” Stanford professor Itamar Simonson and co-author Emanuel Rosen take a look at the impact that access to perfect information has on the way consumers make purchase decisions. The big finding is that more and more, the value of brand, and the type of awareness marketing aimed at keeping the brand top of mind, is quickly eroding.

In the lead up to Street Fight’s Local Data Summit in Denver on February 25th, we’re taking a deep dive into the world of local information, speaking with some of the sharpest minds in the industry about using the data to make businesses more efficient, and to make experiences richer for consumer. Street Fight caught up with Simonson recently to discuss how access to local information is transforming the way consumers find and buy goods locally, and what it means for the local tech industry.

Walk us through the key findings from your book and what they potentially mean for marketing.
Let’s say you wanted to buy a camera. In the past, you probably would walk into the store, and evaluate the quality of the products based on the brand name, the price, where it was made, or the recommendation of the salesperson. These are all proxies — indirect indicators — of quality. In other words, they might correlate to quality, but they don’t really tell you whether a specific product — the one you’re holding in your hand — was a good fit for you. That was the old days.

Today, with the help of information made available through the web and mobile, consumers have access to information about the quality of a products based on a number of much more direct indicators like reviews, and this affects how they assess quality. For some products, like, say, paper clips or hangers, consumer behavior will not change much. But for many categories, access to [abundant and ubiquitous information] fundamentally changes how consumers make decisions, and what information they rely on in the purchase process.

Talk a bit about what this changes means for marketers, as well as consumers.
This trend has far reaching implications for marketers. It means that for people who market those products, traditional assets like brand name, loyalty and price and number of other proxies consumers use to establish quality, are becoming less important. If I know the quality of a given product, I don’t have to rely on a brand name or a salesman’s recommendation. Even if I had a great experience with a different product by the same brand before, it doesn’t mean I’m going to go back to the same brand.

As you discuss in the book, a big part of branding was to help solve an information problem for the consumer by ensuring trust for an unfamiliar product. Does that mean that branding has a different objective or is less important altogether today?
It’s not as if branding is completely irrelevant — it has other functions. When you walk around with your Louis Vuitton purse, it’s often not a matter of quality. Implicit in the brand is an idea of what kind of person you are, and what kind of products you like to be seen with. But, overall, the function of brands as indicators of quality is declining.

There’s an assumption among startups that the local digital marketing industry will be equal to, or larger than, it was before the Internet. Given your thesis around the declining role of marketers in shaping consumer behavior, do you think that assumption is flawed?
In some categories, the amount of money spent on [traditional marketing] will decrease. Certain functions of marketing will continue, but overall, in the long run, we will be looking at decrease expenditures on marketing. What’s more important is the ability to develop the right products and respond quickly to consumers.

If you’re selling milk or soap, things will not change in the foreseeable future. But if you’re selling product or service where consumers take their time to research before purchasing like durables, or, say, the restaurant industry, there’s going to be big changes.

Today, local media businesses typically sell ‘awareness’ products in the form of banner ads and sponsorships. What does this mean for the wider local media industry?
For banner ads, and other top-of-mind vehicles, they will become less important in many product categories. When you decide to buy, it’s not matter of what’s on top of your mind. You’re going to look around and see what’s the best product available — not the one that you remember first.

If the value of branding as an indicator of quality for consumers is declining, where should marketers focus in order to affect consumer behavior?
They need to find out what reviewers are saying, how they evaluate products, and figure out as quickly as possible how to shape that conversation. If the product is getting bad reviews, it’s not a matter of manipulating the reviews or advertising more — that’s not going to work. You need to find a product that will get better reviews.

The idea of market research is changing as well. In the old days, companies used market research to find out what people wanted today in order to give them that product in a year or two. That’s not working so well anymore because consumers make purchase decisions based on what people are saying right now — not a year ago. Marketers should track what people are saying as efficiently as they can, respond in kind, and conduct experiments constantly. You can change prices, or even make alteration to the product or service that you’re offering. When you get feedback, you need to adapt and change as efficiently as possible.

Steven Jacobs is Street Fight’s deputy editor.

Find out more about how big data can be used in local context at Street Fight’s Local Data Summit, taking place on February 25th, in Denver. Learn from and network with some of the top local data experts in the country. Reserve your ticket today!

  1. Review Monitoring
    February 11, 2014

    Steven you nailed it with “They need to find out what reviewers are saying, how they evaluate products, and figure out as quickly as possible how to shape that conversation.” Negative reviews especially will show true colors and highlight where a business should be improving.
    We offer a service and one of the upcoming updates is the text cloud that would isolate keywords that show up the most both in positive and negative reviews. This will give the owner an summarized idea of what to do next.

  2. ekw0357
    February 13, 2014

    So, I like reviews and find a great deal of value in them, but I’m going to target GOOGLE reviews here because GOOGLE should take a look at their business ‘review’ policy. They created a monster that every merchant is stuck with. I do marketing for a local business and we have several false/fake
    reviews that we can not do anything about. I understand that a business
    should not be able to remove a review that they don’t necessarily like
    or agree with, but there should be some way to flag fake reviews.
    Another suggestion is to let the business to completely opt-out of all
    reviews if GOOGLE is not willing to help.

    1. Review Monitoring
      February 15, 2014

      You can actually flag google reviews, but we would also suggest activating their happy customers and requesting reviews directed towards Google so that you can easily dilute negative feedback.

      There are two ways to do this:

      1. Instant email after a purchase – “Share your feedback”

      2. Give out printed Review Request cards with a link redirect. (sample: )

      1. ekw0357
        February 18, 2014


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