That research, from computer scientists John W. Byers and Georgios Zervas of Boston University and Michael Mitzenmacher of Harvard, finds that ratings scores on Yelp for businesses running daily deals are 10% lower on average.

Is it worth it to your business to run a Groupon? Let us know.

It’s certainly worth noting that the researchers studied both Groupon and Living Social, which are the two biggest players in the deals space, with Groupon still in the lead (though the gap seems to be narrowing).

“A key selling point of a daily deals site is the promise of beneficial long-term effects for merchants participating in a deal offering,” the report says. “Since discounted deals typically result in a net short-term loss to the merchant as customers redeem the coupons, a merchant is pitched on the expectation that some new customers, initially attracted by the deal, will become repeat customers, providing a long-term gain. Participating merchants should determine that these gains outweigh the costs, which include providing discounts to their existing customer base.”

“We find that the average percentage increase in reviews across all merchants who had received at least one review in the 3 months prior to the Groupon offer is 44%,” it says. “Meanwhile, the average month-over-month growth in number of reviews for deals prior to their Groupon offers is about 5%. Similarly, the average percentage increase in reviews the month after the Groupon offer is 84%. Roughly 20% of merchants in our dataset (461 out of 2,332) had received zero reviews in the 3 months prior to the Groupon offer. Of these, 270 received at least one review within two months after the Groupon offer.”

The researchers also conclude that “Yelp star ratings decline after a Groupon deal.”

“The average drop in ratings is 0.12. This could affect any sorted order produced according to Yelp rankings significantly,” the report says. “Also, Yelp scores are reported and displayed according to discretized half-star increments. Thus, an average drop of 0.12 suggests a significant number of merchants may lose a half-star due to rounding. This could have a potentially important effect on a business; a recent study reports that for independent restaurants a one-star increase in Yelp ratings leads to a 9% increase in revenue. However, the transitory nature of Groupon-driven reviews, in addition to complexities of modeling hidden factors like weighted moving averages, cloud our ability to pinpoint the repetitional ramifications precisely.”

That study by Michael Luca says that its findings suggest that “online consumer reviews substitute for more traditional forms of reputation,” that “consumers do not use all available information and are more responsive to quality changes that are more visible and consumers respond more strongly when a rating contains more information.”

The new study also looked at text, and found that reviews mentioning either “Groupon” or “Coupon” are associated with star ratings that are 10% lower on average than reviews that don’t use these words. The few reviews that used both words were actually 20% lower on average, according to the report.

One of the other findings from the study was that Groupon and deals sites in general are greatly helped by word of mouth (like Facebook “likes”). Kind of a no-brainer, but they have data to back it up. There is much more data to back all of these findings up. Detailed methodology can be found throughout the report, which you can read in its entirety here.

While the findings may turn some businesses off of the Groupon strategy, the news isn’t all bad for Groupon these days. Another report released by Yipit finds that Groupon’s revenue increased by 13% in August, while it gained 2% market share.

Key findings from Yipit’s report include:

• Groupon’s revenue increased 13% from July to $121 million, a $1.5 billion annual run rate.
• LivingSocial’s revenue declined 3% to $45 million, a $540 million annual run rate. August was the second consecutive month that LivingSocial experienced declining revenue in North America.
• The North American Daily Deal industry resumed growth in August. Industry revenue and number of deals offered increased 9% from July.
• Groupon gained market share at the expense of LivingSocial for the second consecutive month. Prior to July, LivingSocial had been gaining market share on Groupon for several months.
• In its first full month, Groupon Getaways outperformed LivingSocial Escapes in the travel deals segment. Groupon Getaways generated 42% more revenue than LivingSocial Escapes and averaged 78% higher revenue per deal.

This comes after a recent report from Experian Hitwise indicating that Groupon’s traffic was down 50% over the summer while LivingSocial’s was up 27%.

Groupon is now testing e-commerce deals in the UK. This could provide a whole new set of opportunities for business. For brick and mortars, it could lead to more online sales. For strictly online businesses, it could simply let them into the club. Getting repeat business from a consumer might be easier to achieve online. If you’re a click away, as opposed to a drive away, a customer might be more inclined to come back, given the right customer experience. ”

It remains to be seen if the e-commerce deals will become a mainstream feature across Groupon’s markets, but it’s definitely something to watch for.

Do you think the benefits outweigh the negatives for businesses offering deals through Groupon or similar services? Tell us what you think.

In summary, the changes did away with the joint streaming and DVD subscription service and made each service its own at a rate of $7.99 apiece per month. For users that had the joint plan, they will have to pay 60 percent more if they want to keep the same services.

Have you decided to drop Netflix or at least part of the service? Let us know.

According to Bryan Gonzalez, the director of Social Media Labs at the Entertainment Technology Center at the University of Southern California, a lot of people are trying to determine whether or not they want to keep both the streaming and the DVD services. Other users have said that they are dropping the Netflix completely.

It seems clear that Netflix’s action was a step toward moving away from DVDs. Although video streaming is still a very young industry, the company didn’t want to get left behind like Blockbuster did. There was also an obvious financial motivation, because, as Gonzalez explained, the company would have to have a lot of cash in order to obtain all the high quality content that it wants distribute.

The user reaction to the news was quite loud, from what we could tell, but Netflix CEO Reed Hastings apparently thought otherwise. In the company’s recent earnings call, he said, “Believe it or not, the noise level was actually less than we expected, given a 60 percent price increase for some subscribers.”

Gonzalez told us that he thinks Hastings was trying to be optimistic about the situation. It is, however, worth noting that a recent report from The Diffusion Group found that even though 70 percent of users were disappointed by Netflix’s price hike, only 12-15 percent would actually cancel their services.

“The fact that there were so many Netflix users that were upset, kind of really proves to you how much Netflix is really loved, or at least used,” Gonzalez said. “Truth be told, Netflix is still a pretty good deal compared to all the other offerings out there.”

If users do decide to jump the Netflix ship, he pointed out that there were other alternatives for them such as Amazon Prime or pay per view models like Apple iTunes or Vudu, Walmart’s new streaming service.

“The positive news for consumers, and everyone, is that there are tons of options out there and maybe this will expose the market or the user to this great market of content,” he said.

Gonzalez believes that there are other players that could benefit from Netflix’s move as well. For instance, any company that is trying to figure out how to distribute content could take this as a learning experience. Additionally, he thinks that consumer electronics manufacturers who have TVs with built-in apps other than Netflix will have more streaming opportunities as a result.

“I think, ultimately, a lot of companies will benefit, not just because it will expose users to more options, but also, users will benefit because they’ll move outside of Netflix and see what else is out there,” he said.

From the entertainment side of the business, it’s no secret that the studios are struggling to establish a business model around streaming. As a result, Gonzalex believes they are pleased to see Netflix and other players experiment with revenue models because “high quality content does demand a certain price.”

Is Netflix headed in the right direction? Share your thoughts in the comments.

Their streaming catalog has certainly improved a great deal over the past year or so. No question. It’s got a long way to go to match their DVD catalog, but the company has certainly given people more reasons to use its streaming service.

In June, the announcements were things like: “New Look and Feel for the Netflix Website,” and “Temporary Removal of Sony Movies through StarzPlay.” In July, while the company did announce expansion into Latin America, came the big announcement of price changes, where members signed up for the popular unlimited streaming and unlimited DVDs (one at a time) plan have to pay 60% more to keep the same service (which is actually turning into two separate plans).

Backing up to June, the Netflix redesign turned into a PR nightmare on its own. Though Steve Swasey, VP of Corporate Communications was quoted as saying, “We know the vast, vast majority of people like this,” regarding the design changes, it was clear by reading comments all over the web that if that was indeed the case, the vast, vast majority wasn’t speaking up nearly as much as those that loathed or even slightly disliked the design.

It didn’t take long for users to max out the comments section of Netflix’s original announcement, mostly with harsh criticism of the design changes. We ran several stories related to the design here at WebProNews and received hundreds more. The comments on the removal of Sony movies reached into the thousands as well, though many of them were simply more complaints about that redesign.

Just before Netflix announced the price hike, they did cave a little bit on some of the complaints about the design. They said they’d bring sortable lists back. Then they dropped the price bomb effectively smashing what little love that may have earned back from the users who were upset about that.

Of course when Netflix announced the price hike, the negative comments poured in again on Netflix’s blog, once again maxing out. Again, we got hundreds more on our own coverage. Any guesses as to how many comments their Facebook update about it got?

Just shy of 80,000.

Of course Netflix knew there would be plenty of backlash. According to CNET, they had extra customer service reps working when they announced it. “We knew what the reaction would be,” Swasey told the publication. “We are not surprised. We knew that there would be some people upset by the service and with the price being adjusted.”

Since then, Netflix has just been pushing on, likely hoping the fury would die down.

This past week, Netflix announced that its Android app could support more devices, as previously it had only supported a few. Now it supports 22. The reviews for the app are overwhelmingly positive. At the time of this writing, it has 32,072 five-star ratings and 6,921 four-star ratings. Only 4,882 gave it a one-star rating, and you have to wonder how many of those are just bitter about recent events. Some of them were simply rated low because of the app’s incompatibility with some devices.

NetflixAndroid abound! You can now instantly stream movies & TV shows from Netflix on-the-go using your HTC Evo 3D, Droid 3, Galaxy S, HTC Thunderbolt, or Motorola Atrix phone — plus many others that are now supported. Check it out in the Android Market http://bit.ly/nfxandroid, and more info on our blog: http://bit.ly/NfxAdrd 1 day ago · 1,482 likes · 1,765 comments

Of course if you look at the comments on Netflix’s announcement about this, you’ll quickly find more jabs at the company’s decision to raise prices. “Perhaps you should spend more time on keeping current services working instead of setting up new services,” said Mitch Snyder, commenting on the Netflix Facebook post.

In afternoon trading on the day before the price hike was announced, Netflix stock was priced at 290.15. At the time of this writing, though up from yesterday, is still down at 277.30.

Many users have said they’d quit the service. They were saying that before the price hikes even – just because of the redesign. Many more indicated they would do so after the price announcement. An outage last weekend probably didn’t help too much, though Netflix is crediting 3% of users’ bill for the inconvenience.

“Netflix’s July 12th price change announcement hammered the company’s consumer perception down below its competitors where it still remains today,” a representative for YouGov BrandIndex tells WebProNews. “Two weeks after the Netflix price structure notice on DVD rentals and streaming, the Los Gatos-based company saw its consumer perception with adults sink rapidly below competitors Redbox, DirecTV and even bottom-score dweller Blockbuster, which resides in widely-held negative opinion territory.”

“The brand which seems to have benefited the most appears to be kiosk-based rental chain Redbox, whose perception has moved from a virtual tie with DirecTV to pulling away to higher positive score numbers.”

What should Netflix do to help its brand perception? Tell us what you think.

This year marks the 12th consecutive year that Harris has released the RQ poll.  This years’ poll looked at 60 top companies.  The poll took an online format and involved 30,104 people.  The “Reputation Quotient” is a number score out of 100 that is based on six categories of review – social responsibility, emotional appeal, products & services, workplace environment, financial performance and vision & leadership.  Scores are broken into rankings – 80+ being excellent, 75-80 very good, 70-75 good and 65-70 fair.

Google topped the poll with a combined score of 84.05, which is excellent.  Google ranked in the top 5 on all but one of the previously named categories of review.  The one from which they fell out of the top 5? Emotional appeal.  Johnson & Johnson placed second for the second year in a row with a score of 83.13.  3M rounded out the top 3 with a score of 82.56.

Last year’s winner Berkshire Hathaway fell to fourth place and with recent location tracking issues not a factor in the survey, Apple made a big move from 12th to 5th.

The bottom three on the list of 60 are Goldman Sachs, BP, and AIG – three companies who have had their share of bad press in the past few years.  AIG’s score was a meager 47.77, almost 20 points away from just a fair rating.

Here are the rankings for each category:

An interesting find within the survey is that overall reputation rankings of all industry are up from last year.  Is it possible that people are at least attempting to restore trust for some maligned sectors?  Financial services sector positive rankings jumped up 6 percent from 2010.  No industry declined.  Even the Tobacco Industry held firm at 11% positive ratings.

The most positively viewed sector is Tech, with a 75% positive rating.  The biggest jump in approval ratings was within the automotive sector, improving 15 points over the course of the year.

So what characteristics makes a company fall into that good-excellent reputation rating?  Here is Harris’ observation:

Companies that receive good-excellent reputation ratings are those that can be characterized as companies that “support the infrastructure” of the lives of the American public, both personally and professionally.  These infrastructure companies fall into two camps.
–    Those that are so solidly reliable that they let me perform my personal and work tasks without having to think about them
•    This is particularly true of those that are part of the long-term elite reputation companies

–    Those that delight me or enrich my life
•    With minor exception, this is true of those companies that are on the path to join the long-term reputation elite

What is the long term reputation elite that they refer to?  It describes companies that have received a 75+ rating for the past 10 years.  These companies include Johnson & Johnson, Sony, 3M, Coca-Cola, Microsoft, UPS and FedEx.

Wonder if Google can become one of these long term elite companies?

Well, according to The Conference Board Reputation Risk Research Working Group and a survey of 148 risk management executives of major corporations, only 49% said that the management of reputation risk was highly integrated with their enterprise risk management (ERM) function.

Maybe the lack of concern is because the role of “reputation risk management” isn’t really something you want your typical risk management guy worrying about–let him worry about the liability insurance and employee identity-cards.

Instead, let the chief PR guy or head of marketing take responsibility for managing and monitoring the company’s reputation management because right now, only 34% of risk managers give a hoot about monitoring social media and a mere 10% actively participate. Can you imagine if your VP of communications informed you that he wasn’t too worried about social media?

The report isn’t all bad news. While risk managers may not quite “get it” they are at least making an effort to better understand reputation management with 81% saying they’ve increased their focus on reputation management over the past 3 years.

Which leads me to a question. Who do you think should be responsible for a company’s reputation management? A risk manager, marketing, PR, or all of the above?

Comments

Of the 703 senior executives polled a whopping 100% of CEOs admit to frequently thinking about their company’s reputation–although only 38% of executives seem to care about their personal reputation. Clearly they’ve not heard that 87% of us tie a CEO’s reputation to that of the company (source: Hill & Knowlton).

It also appears that the higher-up the totem pole an executive is, the less threats he or she sees against their company’s reputation. At the CEO level only 56% see a "High/Moderate" threat to the company reputation, while those below the chief executive see a 67% threat. Of course, both camps are being a little too hopeful, what with previous studies showing 83% of companies will face a reputation crisis in the next five years that devalues them by 20-30% (source: Oxford-Metrica).

Lastly, a staggering 87% of global executives admit they’ve sent out (or received) at least one email, text, or Tweet, that could have led to a reputation-suicide.

Comments

I was excited to appear on the nationally broadcast America This Morning show. You can view the edited video online at the ABC News web site.

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