HONG KONG—A recent study has found that online product reviews with mandatory disclosure of incentives from advertisers is good for review helpfulness and sales as well as sellers and consumers. This research was conducted by Lingnan University’s Department of Marketing and International Business.
Online product reviews have become a main element in branding and promotion, leading advertisers to offer incentives for customers to post positive reviews. However, most reviewers do not disclose such incentives. Despite there being a legal requirement to do so, the common perception is that disclosing incentives negatively affects the credibility of product reviews.
Researchers from Lingnan University thus decided to examine how mandatory and voluntary disclosures affect review bias, helpfulness and product sales.
Product review data from Amazon.com was the basis for the study, given its wide reach. It also allows consumers to write reviews and purchase products on the same platform. A random sample of 388,319 reviews written during the period of January 2014 and June 2017 were studied. Of this number, 47,203 had mandatory disclosure. The researchers compared incentivised reviews with mandatory or voluntary disclosure in terms of: effects on review bias, votes of helpfulness and product sales.
Their findings showed that mandatory disclosure was more salient than its voluntary counterpart in terms of incentivised product reviews and led to less biased reviews. Mandatory disclosure also resulted in better quality reviews, improved consumer trust and confidence and enhanced sales.
Voluntary disclosures, while they produced more favorable reviews, raised consumer expectations, which may lead to higher customer disappointment.
The study suggests that the link between incentivised reviews and product sales is not as straightforward as previously thought; therefore, online marketers need to rethink the practice. It also emphasised the need for regulated mandatory disclosure of e-platforms. Left unchecked, the informational value of online reviews could be lessened.
The researchers recommend platforms to adopt mandatory disclosure for incentivised reviews. In this way, consumers can be sure of the authenticity and truthfulness of the reviews, thereby promoting the healthy development of e-commerce and social selling.
