Are Online Reviews Making Brands Irrelevant?

My friend Nathan Labenz writes about the success of TripAdvisor (the leading review site of hotels) and what it means to the future of brands:

Historically, brands were built on the assumption of limited information. As mass production made it possible to sell soap and soup nationwide, companies developed brands to represent quality and cultivate product loyalty. Brands were a natural fit for radio and TV advertising, and brands thrived with the proliferation of cable channels, which kept advertising costs down while offering unprecedented demographic targeting.

Facebook and Twitter get most of the attention for brand disruption, but the biggest problems for brands are in search and e-commerce.

Take this Google search for Super 8 Motels, for example. On the front page, you’ll see ratings that hotel guests have written about particular Super 8s on TripAdvisor, Yahoo Travel and Yelp. Importantly, the reviews vary widely. When I checked, a New Mexico location was rated 4.5 stars, while a Los Angeles location was at 3.5 stars and one in British Columbia had only 2 stars. Such location-specific information undermines brands’ ability to affect consumers’ purchasing decisions with 30-second TV spots and gives TripAdvisor a powerful position….

For the Super 8 brand, the end game could be scary: as TripAdvisor accumulates more and more trusted reviews, the best-performing Super 8s, all of which are independent franchises, may eventually realize that their business is suffering from their association with lesser motels. At that point, we might see a “brand run,” wherein the best locations leave the chain, lowering the brand’s value and ultimately leading to its collapse.

It's a solid point and underdiscussed in the hoopla about social media and how it's affecting big brands.

An even better example than Super 8 might be Mariott as I'm guessing a large percentage of Super 8 rooms are sold on no reservation and reviews don't play as much a role.

In the case of Mariott, I'm likely to have reserved a room in advance. In the old days, perhaps I assume that all Mariotts around the world are good. Now, in conjunction with booking the reservation online, I can read reviews of individual locations. There's more variance in the quality of Mariott properties than Mariott HQ would like to admit (I've stayed in dozens of Mariotts myself), and that variance is now for all to see on sites like TripAdvisor.

The end game that Nathan proposes–the outperforming properties dissociating from the national brand because they're being hurt by the low performers–seems quite possible in the long run. After all, wouldn't you rather stay at a hotel you've never heard of (i.e., no national brand) but one that has hundreds of credible five star reviews over a Mariott location that has hundreds of two star reviews?

Eventually, the good franchises will recognize this. And Mariott HQ–whose business is premised on the benefits of a national brand uniting thousands of independent franchises in an information-poor world–will be hurt.

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