“Either you sell the client some stock or he sells you a reason he can’t. Either way a sale is made, the only question is who is gonna close? You or him? — Boiler Room
These last couple of days there’s been a bit of fresh discussion about “fake” user reviews & social media fans being used to sell things on the interwebs. My (I don’t think we’re fake) friends Josh Brown & Barry Ritholtz brought up some interesting insights, both ultimately resting on the same point: ‘fake’ is generally bad form and, at least in the investing world, really bad business.
Now, most of the dialogue taking place on the ‘fake’ front is the result of the recent NY Times story about a man who made a ton of cash writing ‘fake’ book reviews on Google and Amazon. He’s since been shut down, but the conversation he’s created is really what interests me more.
“The wheels of online commerce run on positive reviews,” said Bing Liu, a data-mining expert at the University of Illinois, Chicago, whose 2008 research showed that 60 percent of the millions of product reviews on Amazon are five stars and an additional 20 percent are four stars. “But almost no one wants to write five-star reviews, so many of them have to be created.”
Consumer reviews are powerful because, unlike old-style advertising and marketing, they offer the illusion of truth. They purport to be testimonials of real people, even though some are bought and sold just like everything else on the commercial Internet.
Mr. Liu estimates that about one-third of all consumer reviews on the Internet are fake. Yet it is all but impossible to tell when reviews were written by the marketers or retailers (or by the authors themselves under pseudonyms), by customers (who might get a deal from a merchant for giving a good score) or by a hired third-party service.
…And, Sally of De Moine LOVES how detailed the article was!
Fake reviews are technically a breach of the Terms Of Service Agreement you didn’t read, but ultimately fake & real worlds collide anyway. See — in the real world it’s ok to host advertisements shilling 1000% penny stock returns and shady investment newsletters on your website, just as long as they’re not next to fake Hawaiian resort reviews.
The Federal Trade Commission Act allows the FTC to act in the interest of all consumers to prevent deceptive and unfair acts or practices. In interpreting Section 5 of the Act, the Commission has determined that a representation, omission or practice is deceptive if it is likely to:
- mislead consumers and
- affect consumers’ behavior or decisions about the product or service.
In addition, an act or practice is unfair if the injury it causes, or is likely to cause, is:
- not outweighed by other benefits and
- not reasonably avoidable.
So, what if Disneyland ultimately isn’t the ‘happiest place on earth’? Can I sue? What if that song I bought, didn’t “rock my world”? Was there no avoiding the siren call of Huey798’s eargasmic review? And technically speaking, the Federal Trade Commission says there is supposed to be an endorsement clause (which, guess again, no one reads) anytime someone economically benefits by saying something about a product or service. I get it. I should probably also tell all of my friends that my Hollywood clients made the movie they’re about to watch; and tell them to ask for other opinions before fully considering mine. And then sign this form, here. For the record, I don’t blindly condone ‘fake’ anything, but at the end of the day we need to redefine ‘fake’, and also look at what it means to have fakes walking among us.
To frame this properly I think it’s important to, first, face reality.
We live in an era when anyone, from Congressional leaders to Fonzi (ask your parents), can (and do) go from high office & public opinion to fattening their wallets, pitching anything from reverse mortgages and the latest revolutionary rejuvenating face cream, to sugar-coated Genetically Modified cereal. We live in a time when it’s the rule rather than the exception that the talent on the fashion runways & sports arenas will be more enhanced than not. I’m not questioning right or wrong, I’m only saying what is. And what is, is the reality that none of these purchased reviews are becoming New York Times bestsellers based on prostituted reviews. What is, is eventually the bad restaurant will still close. What is, is that heroes, wrongly celebrated, will eventually fall.
So what is ‘fake’?
Is Sophia Vergara any less of my dream girl because she’s a bottle brunette, instead of being her “real” blonde self?
Fake is defined as a forgery, a sham. A thing that is not genuine. And as the pixels flicker in front of your eyes, I can assure you that while the motivation may not be as selfless as someone pouring their heart & soul into a completely unbiased “user review”, those paid reviews do have heart & soul. Their heart & soul just happens to be in it for the money. But they are, in fact, genuine & real. It’s just the underlying motivator that maybe has you miffed; because those reviews are written for a type of personal (and financial) gain that’s not fully appreciated.
Is it really so wrong?
Think about it like this — the author, or App developer, or even the restaurateur actually cared (selfishly) enough to, at least, pay people to create the appearance of buzz or relevance — to woo you into their little slice of capitalism. Actually, in some ways you should give them a little bit of praise — just like that woman in the gym, who paid the doctor to change the appearance of certain things. At the end of the day, are you leaving everything you know, love, and hold dear just because of the new shiny thing bouncing in front of you? Of course not. You’re not 3 years old. And none of this fake temptation is actually new. 60 years ago, 9 out of 10 doctors preferred XYZ cigarettes.
Paid reviews on: Amazon, Google, Yelp… So What?
Car manufacturers, for years, have hand-pick writers to test drive new models of their cars, flying them to exotic track locations & fancy hotels, for free, to garner some sort of review. Some disclose, some don’t. Should people sue GM because the Hummer H2 is nothing more than a Suburban 4×4 with a marked up price tag, less seating, worse gas mileage, and shinier colors? Apple gives their iPhones to bloggers to review, hoping (i.e. modeling the statistical probability) that certain bloggers will ‘like’ their “magical device”. And, sure, some people with scruples will hack-out an even-keeled review & may even have the cojones to lay-down a hugely negative & equally thoughtful ‘real’ review in public, but probably not — at risk of losing their access to future stories and opportunities to play. And so, how real is that?
And this is just the beginning.
Think about the depth of hypocrisy emerging in social media right now — supposedly the people’s media — the ultimate meritocracy among us common “real” folk. And already there’s Klout, the latest entry in the social manipulation game. Klout actually rewards ‘normal’ people free things, to tell other people about the “great” free things they’re receiving. And those people who do receive free stuff, do because the omnipotent algorithms said these people are known to influence their friends. And, Klout is totally transparent about the motives of their user-review-based business model…
But is it “real” reality?
So, good reader, are you going to Joe’s Shack of Slop shocked to hear that the restaurant secretly paid to post the only 10 opinions ever written — which also happen to all be five stars? Or the book you saw was the ‘tome of the century’ actually sucked? Have you no friends, or deductive reasoning? Have you no sense of what lurks in the world of unknowns? Are you really buying a book solely based on what “BigMoneyz” has to say about it? And are you really going to download that app just because 1000 people, in broken english, on iTunes, think “It most is amazeng game evar. I win big. use my discount code 123sucker”?
Paid-promotion or enhancement isn’t new & it isn’t going away. It’s all fake, in a world full of marketing reality; the real wild west of real. At the end of the day, we “can’t legislate away stupidity.” So please, remember — if you’re a mindless sheep consuming everything you see, while standing in the grassy pasture of flowery opinions on the internets, eventually you’re going to get sheared. Probably into a nice genuine artificial man-made materials sweater.