The Local Reviews Ecosystem — Threats and Opportunities Abound

One of the slides we presented at last week’s Social Local webinar was from my Local Reviews Ecosystem post. We sped through it and given the brouhaha that has been bubbling up between Google and reviews sites like Yelp and TripAdvisor over the past year, I thought it might be of interest to repost it.

As I mentioned in the earlier post, in my survey of 20 SMB SEM consultants about their top social media client priorities for 2011, review generation and review management was by far the highest on the to-do list.

As you can see from the infographic, the ecosystem is complex, just like the entire local search ecosystem is complex — David Mihm’s chart on how local search services are connected deserves to be included in a Where’s Waldo book. But within that complexity lie amazing green fields of opportunity for innovation. Some thoughts on how you might approach the sector:

1. Review Stimulation
   There are any number of reasons why people post reviews online. They may have had great service or poor service. They may be responding to a promotion. If in fact many advanced SMBs will be focusing on generating reviews this year, they are going to need help.  Companies like Customer Lobby and Demand Force are examples of new business models built around assisted review generation.
2. Review Generation
   Once customers have been motivated to review a service, there are a variety of places to post the review — national directories, vertical sites, city sites, Q& A sites, social media sites, LBS services, blogs, etc. I am sure this year we will see a proliferation of new ways to express one’s feelings about a particular service.
3. Review Effects
   Reviews, likes, tweets, etc., have an oversized effect on the Web ecosystem. Reviews provide excellent “spider food” for SEO, which in turn makes it more likely that sites with reviews show up in search, which means that if someone reviews your business, it’s highly likely that your customers will be exposed to the review sooner or later. Sharing opinions (a.k.a. “Reviews”) is a key part of social networking glue so remarks about poor service can become the seed of a conversation that seems to never end. And strong expressions online have a tendency to go viral via e-mail, social nets, etc., further amplifying the message. Perhaps this is why reputation management services such as Marchex, YextRep, MyRepMan, Vendasta, etc., are proliferating.
4. Threats & Opportunities for the Future
   There is clearly huge opportunity in Review Stimulation & Effects Management. As with all other SMB services, the difficulty of customer acquisition, churn and the overall fragmentation of the market means barriers to entry are low while barriers to mega-success are high. In short these areas will get even more confusing for SMBs, but there will be plenty of service providers. One-stop shop innovation perhaps could win a big part of the day here where a single tool provides the SMB (or more likely the SMB agency) the ability to manage its social network (customers, vendors, partners, friends and family) while providing incentives for reviewing, sharing, liking, etc., but in the near term I see a lot of noise. On the review generation side of things, while new Web and mobile applications will certainly create new behaviors around the concept of reviews, I think we are rapidly entering a time of consolidation. There are too many review sites fighting for critical mass and the combination of status updates as reviews (Twitter, Facebook, etc.) and 800-pound gorillas like Google Hotpot entering the game is going to mean a lot less oxygen for other players. If reviews are part of your strategy, I recommend breaking out the whiteboard and figuring out how you can differentiate.

And in a related note, Mike Blumenthal reports that fake reviews are starting to get mainstream media attention.