I'm Alex Berman and you're watching SELLING BREAKDOWNS.
Let's start today with a game.
You ready?
So, you need to think of a product, the more random the better.
Now, google it, but at the end add the word "reviewed".
You win the game if the first entry on Google isn't an affiliate marketing site.
How do you tell if it's affiliate marketing?
Well, when you click any of the "buy now" links, you'll be redirected to a retailer,
probably Amazon.
In the web address you'll find a short part of the code that says "tag=" followed
by a user name that probably resembles the review site.
Let me show you
Google "Romance Novels Reviewed"
Here we are, rtbookreviews.com
Let's pick the first book that's featured...and….here, buy now on Amazon
And here you see in the address "tag=romantic times"
If it's not Amazon then you might see something like "aff=" or even "affiliate="
Let's try again
"Chicken Coop reviewed"
First entry
First review
Scroll down to "click here" and there we go, affiliated
Give it a go yourself and let us know in the comments if you find any winning searches.
Okay, now what is the point we're trying to make here?
Well, almost every niche has a review site and that site makes money from the sale of
those products.
In many cases, the site exists only to cater to that niche.
In other cases, you might find established names like CNET or Good Housekeeping or something
else, but they are still making money on any of their audience who click their link and
buy that product.
Actually, that's not true, they make money if you click that link and buy any product,
whether it was the one they reviewed or not.
So the question is: can you trust reviews when the reviewers are making money on the
sale of those products?
Today, we're going to see how deep the affiliate rabbit hole goes.
We'll also see how customer reviews are being manipulated, how social psychology alters
the effectiveness of star ratings in Uber and Airbnb, and how review aggregation sites
like metacritic and rotten tomatoes are no longer passive, they are affecting the products
that are being created.
Okay, let's go back to affiliate marketing.
A few weeks back, a journalist called David Zax, wrote a brilliant article about the billion
dollar online mattress industry and the power struggle between the big retailers and the
top ranking review sites.
I'll put a link to the article in the description, it's long but really worth the read.
In it, he estimates that the big mattress reviewers are making millions of dollars through
affiliate programs and the offer of better percentages for good reviews has created massive
lawsuits.
Because a review on the top ranked sites, for a mattress brand, can literally be the
difference between total failure and tens of millions in revenue.
With online product sales, the review is absolute king.
Derek Hales ran one site called Sleepopolis and it featured a review of a brand called
Leesa.
That review generated 18% of Leesa's $80 million in sales.
And while the going rate is around 5% in a lot of affiliate marketing, like mattresses
and Amazon, you know for sure that some brands are going to offer more in the hope of a positive
word on their product.
The regulations around all this are weak and although sites may disclose that they are
affiliates, they almost never say which brands are paying them which rates.
Even if it's all Amazon links, that doesn't make the rates are fixed.
Video game downloads get a higher rate than electronics so better to sell an xbox game
than an xbox controller.
Also, if one product has sold well from an affiliate, they will often get a higher rate
so it's unlikely they will displace their top seller review, even if they find a better
product in real life.
Now, I'm not saying that every affiliate marketer is dishonest, not at all.
But the entire system is geared towards dishonesty because reviews are only trustworthy if they
have no bias and affiliate marketing absolutely builds bias.
Alright, so review sites are out, what about customer reviews?
They're not making any money in this set up so we can trust them, right?
Well, yes in theory but did you actually meet these customers or did you just see what they
said on Yelp or Amazon?
When looking at these supposedly authentic reviews, British newspaper The Guardian - quote-
"uncovered fake reviewing on an almost industrial scale"
They found that young computer scientist from Bangladesh, India and Indonesia, were being
employed by many western businesses to drastically improve their online ratings.
These guys use a range of VPNs, Proxys and other tricks to get round the usual limits
on IP addresses, enabling them to add a wall of good reviews to any client who pays them.
It's not hard to find them - just post a job on Fiverr or Freelancer.com asking to
boost your business's rating and you will get plenty of applications.
Amazon tried to crack down in 2015, suing over 1000 of these scam reviewers but this
didn't fix the problem.
Now they call themselves "list optimisation", or something similar, and rather than using
tech to get around the problem, they simply have a huge contact list of low-paid reviewers
who will go where they're told.
It gets worse too.
In August, Business Insider reported on a University of Chicago research team who created
an AI that could post fake reviews that were basically undetectable.
But anyone can leave a review on Amazon or Yelp, regardless of whether they actually
used the product or service.
What about Uber and Airbnb where you really have to be a true customer to write the review?
Well, now we have a new problem; guilt.
Ethan Wolff-Mann discussed this in a great article on Time.com last year, link to that
below too.
He points out that almost all Uber drivers have a 4.6 star review or higher and any driver
dipping below that is in danger of being fired.
So if 4.5 out of 5 is under the Uber level, doesn't this make the whole system basically
meaningless?
Your Uber experience is pretty simple; if the driver arrives on time, gets you there
safely and isn't rude, then anything less than a 5 feels unfair since they did nothing
wrong.
And if they do mess up then often it's something that really annoys you so you'll probably
give a 1 or a 2.
Airbnb faces a different issue.
Firstly, you often have more interaction with the host, sometimes having a coffee together
or even a quick tour of the area.
This mean guilt will push you to give a better review than you should have.
Imagine you were buying a house.
Even with a big budget, do you think you'd say 75% of properties you looked at were 5
star?
No chance.
Also, with Airbnb, you're aware that a strong negative review will be visible to other hosts,
who may think you're not worth the trouble as a fussy guest.
Finally, let's talk about games and movies, two similar-ish products who have always had
a strong relationship with the reviewers and critics.
When reviews were mostly in papers and magazines, fans would develop an understanding of these
critics and be able to get a fair gauge of how they themselves would like a film or game
from those reviews, even if that didn't always agree with what the reviewer said,
because they know the reviewer's tastes.
Sure, there were also issues of favourable reviews being given in exchange for exclusive
access, like tours of the set or early plays of the game, but there was at least a relationship
built between reviewers and fans, an understanding of sorts.
Then came the aggregation sites, particularly metacritic and rotten tomatoes.
By turning every review into a score or a positive or negative, they removed the value
and nuance of the actual content of the reviews.
These sites now wield huge power.
Metacritic reviews are often used as a way to calculate bonus payments to staff in gaming,
or the payment from a game publisher to the developer.
So, they will only get a higher fee if they get an 80% average for example.
If you know this, as a game developer, are you really going to take risks that might
alienate some fans but could really excite others?
Probably not.
You're going to work towards mass appeal.
Same in the movie industry.
It's not by accident that studios have become more and more risk averse, sticking to familiar
old franchises.
With a Marvel Universe film, for example, the studio knows that if they get a bad rotten
tomatoes score, they at least have an established audience already, otherwise that green splat
would kill the film dead, like it did recently with Baywatch.
So, can you trust reviews?
Overall, I've got to say no, you can't.
But that's really just an overview of these industries as a whole.
There are plenty of great, honest reviewers out there but you have to read carefully to
find them.
The best advice I can give is ignore ratings, look for details.
If you want a comfortable Airbnb, look for what people said about the bed and the heating.
If you want a new washing machine, find people who talk in years, not in days, because they
probably really had the product.
Analysing reviews is a whole skill of it's own.
Maybe we need a review site of review sites?
We could call it "Meta-critic".
I wonder what I could charge reviewers for that?
Wanna learn more about business theory and history?
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