While retailers initially feared negative reviews hurting sales, positive customer reviews on sites like Amazon have actually increased customer loyalty and sales. Some dedicated reviewers post reviews for one or two books every week. Studies show that advertising spending has become less effective at increasing market share over time, with advertising elasticity declining. Word of mouth recommendations now influence many purchasing decisions more than traditional advertising.

1. This
is
how
“marke.ng
and
adver.sing”
work
these
days.
Through
Word
of
Mouth.

2. That’s
why
we
should
all
become
recommenders
of
“The
Recommender
Revolu.on.”

3. And
that’s
the
reason
why
I
am
here

4. Recommenders
influence
20-­‐50%
of
all
purchasing
decisions.

5. Posi.ve
reviews
influence
90%
of
consumers’
buying
decisions.

6. Recommenders
recommend
more
and
more.

7. Recommenders
recommend,
repurchase
and
…
forgive.

8. Recommenders
do
it
mainly
online

9. While retailers were initially terrified of what bad reviews could do to their bottom
line, they've since witnessed the power of a rave review and embraced the practice. Despite
initial fears, says Craig Berman, Amazon's vice president of global communications, product
reviews have only served to increase their customer loyalty. "It helped us build customer
trust," he says. "It put us in a special place with customers in that they could come to the
site and get honest and comprehensive — and over time, very substantial — firsthand
knowledge from other customers." Berman says the company has some reviewers who
take online shopping to heart. "There are some customers who are extraordinarily proud of
being one of our top reviewers — they take their job really seriously." Some of Amazon's
customers are voracious readers who consider it their duty to review one or two
books every single week. While the company may have come a long way from its
roots, the company's original specialty has not been forgotten.
Read more: http://www.time.com/time/business/article/0,8599,2004089,00.html#ixzz2TvUHmQBF
July 16, 1995
“
“

11. Reviews
do
the
job!

12. Recommenders
buy
and
sell
simultaneously

13. In
China
recommenders
influence
more
than
wherever
else
in
the
world.

14. In
which
field
do
recommenders
count?

15. Why
do
they
recommend?

17. Why
has
adver.sing
lost
its
influencing
power?
“Don’t trust it. Nothing but lies. I’ll ask my friends or colleagues”
“I don’t care. Will search when I
need something.”
“Haven’t even seen it.”
“Nice ad, but so what?
Not relevant for me.”
“So stupid”.
“Too many ads.
I avoid them”
“Not for me. I just bought my stuff”

18. 1980-­‐1990:Adver,sing
+10%
=
+2.2%
marketshare
2008:Adver,sing
+20%
=
+2.2%
marketshare
“
….
the
authors
conduct
a
meta-­‐analysis
of
751
short-­‐term
and
402
long-­‐term
direct-­‐to-­‐consumer
brand
adver?sing
elas?ci?es
es?mated
in
56
studies
published
between
1960
and
2008.
the
study
finds
several
new
empirical
generaliza?ons
about
adver?sing
elas?city.
the
most
important
are
as
follows:
the
average
short-­‐term
adver?sing
elas?city
is
.12,
which
is
substan?ally
lower
than
the
prior
meta-­‐analy?c
mean
of
.22;
there
has
been
a
decline
in
the
adver?sing
elas?city
over
?me.”
Gerard
Tellis,
PhD
Michigan,
is
Professor
of
Marke,ng,
Management,
and
Organiza,on,
Neely
Chair
of
American
Enterprise,
and
Director
of
the
Center
for
Global
Innova,on,
at
the
USC
Marshall
School
of
Business.
He
is
Dis,nguished
Visitor
of
Marke,ng
Research,
Erasmus
University,
RoUerdam
and
has
been
Visi,ng
Chair
of
Marke,ng,
Strategy,
and
Innova,on
at
the
Judge
Business
School,
Cambridge
University,
UK.
Tellis
specializes
in
the
areas
of
innova,on,
adver,sing,
global
strategy,
market
entry,
new
product
growth,
promo,on,
and
pricing.
Prof.
Dr.
Gerard
Tellis

19. US-­‐market
1997
><
2007

20. Up
and
up
it
goes.
(Except
for
a
dip
in
Europe)

21. Why
do
these
costs
con.nue
to
grow?
+7% +3,8% +3,8% +4,6% +5,2% YOY-growth
2010
2011
2012
2013
2014
Amazon spent
$500 million 
$557 billion in 2012

22. It
con.nues
to
grow
because
adver.sing
has
been
an
important
pillar
in
profit
maximisa.on.
*
Produce
@lower
cost.
*
Sell
in
more
markets
@lower
cost
@higher
salesprice/-­‐volume
&
@higher
margin.

24. The
difference
between
a
“recommended
beer”
and
an
“adver.sing
beer”.
http://www.ratebeer.com/

25. The
difference
between
the
fortune
earned
with
each
of
the
2
beers
is
huge.
€ 270 million
$11 billion

26. Correla.on
between
defence(war-­‐)
industry,
adver.sing
spending
and
inequality.
0.474
or
0.61?
0.469

27. Greece.
The
end
of
adver2sing.
Winter
2013-­‐De
Morgen
Thanks
for
listening.
Mail
ques?ons
to
jevedebe@gmail.com