May 2003, MIT Sloan home page
The Internet has spawned such a powerful way of communicating opinion about products or services — call it word of mouse — that reputations are literally a click away from being made or broken, according to MIT Sloan Professor of Management Chrysanthos Dellarocas.
What's needed now, he says, is the design of better systems to properly utilize the huge amount of online consumer feedback flowing hourly to web-based sites.
“Word-of-mouth, which is one of the most ancient mechanisms in the history of human society, is given new significance by the unique properties of the Internet,” says Dellarocas. “Feedback from consumers on the web is global, instant, and persistent.”
Dellarocas recently cohosted the first-ever “Interdisciplinary Symposium on Online Reputation Mechanisms” at MIT Sloan. The event was sponsored by the Center for eBusiness at MIT and the National Science Foundation. As literally millions of people participate in online reputation systems at popular websites such as Epinions and eBay, he says, the need for serious analysis is already here.
“These systems are extremely powerful,” he says. “Word of mouth has always had a big impact. In pre-Internet societies, the impact of an individual's opinions was limited by geography and the extent of his social network, while the Internet has enabled anyone on this planet to make her personal thoughts and opinions accessible to the global community instantly and almost without cost.”
This capability not only allows consumers to tap into the collective experience of the global community regarding the merits of a particular product or service, but it also enables each Internet user to influence the actions of millions of other consumers simply by posting personal experiences on the web.
Internet-based systems pose an important additional challenge, Dellarocas says.
“In the real brick-and-mortar world, we usually know something about the source of a rumor, so it can be filtered or adjusted. But anyone can spread a rumor on the Internet,” he says. “A bad review of a hotel posted three years ago is still there, even if the hotel has been totally changed.”
The growing popularity of these sites has implications for a wide range of business activities, from advertising and brand building to product development and quality control, says Dellarocas.
As a result, the study of these systems must cross traditional academic lines.
“We [had] economists, sociologists, computer scientists, and people from other fields at our conference,” he says. “There is great potential for these trust-building systems, but no one has quite figured out how to properly use them.”
So the Norman Rockwell-like image of people freely exchanging product information over a cyber-clothes line can be shattered by abuse of the technology. As an example, Dellarocas cites the growing use of “promotional chat,” by which companies hire people to post comments in chat rooms in order to influence the overall on-line rating of their product or service.
“Our response to such false chat should be to design more robust chat rooms,” says Dellarocas. “It's like controlling for spam — if chat rooms become full of injected items, we have to deal with that.”
Dellarocas, a computer scientist by training, has become intrigued by the growing role of information technology in reshaping established social institutions and practices.
“People are only now beginning to look seriously at this issue of online reputation,” he says. “As time goes by, vendors will learn how to properly measure online word-of-mouth and incorporate it into their marketing strategies. As a response to this, I anticipate that the current, low-tech, anything-goes chat rooms and feedback sites will be replaced by smarter, more mediated communities.”
That may mean systems where feedback is more carefully compiled, rather than just thrown out “raw,” he says. Or perhaps systems where cleverly designed combinations of fees and rewards for submitting and accessing feedback will help prevent abuse.
“In pre-Internet societies word of mouth emerged naturally and evolved in ways that were difficult to control or model,” Dellarocas says. “What is truly different today is that the Internet allows this powerful social force to be precisely measured and controlled through proper chat room engineering. It might well be that the ability to solicit, aggregate, and publish mass feedback will influence the organizational and social dynamics of the 21st century in a similarly powerful way as mass broadcast affected business and society in the 20th century.”
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