Compensation for Recommendations

Have you ever recommended a product you found online to a friend? I know when I was working in retail that I would often recommend products that my own store didn’t carry. I recommended products despite the fact that I wasn’t going to make the commission on that sale. But imagine if you could make commission on your recommendations? Wouldn’t it be wonderful to be compensated for endorsing that product? Well now you can.

Social media shopping sites are now paying users who post product links that will create traffic to their websites. For example, if you add a lipstick to your Pinterest board with a link, you can be compensated for every time someone clicks that link.

Beso, a retail website, now pays users that send clicks to major retails such as Target and Gap. The sites determine who gets paid by providing each user with a unique link. Whenever someone uses that “unique” link to purchase an item, a payment is deposited into the referring user’s account. This is known as affiliate marketing. Links are easily traceable whether it’s via a Facebook status or photo on Pinterest. The social media shopping sites acts as a middleman. They will collect a fee from the retailers and as well as a fee from depositing payments into the users’ online accounts. Beso pays users approximately 14 cents per click they send to retailers. Other companies like Pose only pay when a purchase is made with a referral link. The average payment made per purchase is 5% of the price.

In the past, it was common for companies to purchase favorable mentions. The idea of buying someone’s “word of mouth” has been taken to a whole new level. Anyone on Facebook, Twitter, Pinterest, and so forth have an opportunity to make money. The Federal Trade Commission is arguing that this practice is blurring the lines between a recommendation and a paid endorsement. The FTC is stating that readers must be flagged. If someone is being compensated for his or her endorsement then it should be disclosed to the public.

Facebook and Twitter policies allow their users to post referral-based links, but require their users to disclose if they are getting paid. Beso is encouraging their users to add hash tags like “#spon or #paid” which would state whether their recommendation is sponsored or paid for.  Many users don’t think their friends or family will have an issue with them being paid for their endorsement. Because of this, some users are not disclosing if they are being endorsed. They feel it’s unnecessary to mention.

Personally, I often purchase products that have been reviewed and rated highly. This poses a threat to trusting anyone’s recommendation. How do I know if this product is reviewed accurately? Is the product really that great or are the reviews falsified by a user who was looking to make extra money?

Are people less likely to believe reviews online now that people are being compensated? Do you think the lines are being blurred? Is it necessary to disclose if your recommendation is being sponsored?

2 thoughts on “Compensation for Recommendations

  1. The idea of people being paid for recommending products is great, but I agree with the author regarding misrepresentation of products. As consumers, whenever we make a big purchase or want to try a new product, most often we turn to online reviews to see what other people have commented about it. A buyer is thinking whatever review is being read is honest and not biased. As the author mentioned, the trust issue comes regarding someone is recommending the product because it is good or because they want to make money, I agree with this and there should be a check system set up. How Ebay works, where if a user is falsifying information, either it can be banned or rated low so that way consumers are aware of that users intentions. This way it gives users the initiative to be accurate with their recommendations and also to display themselves as being paid.

  2. This post is relevant because I do agree with your point of the blurring of the line. I trust others’ recommendations because I feel that they are unbiased (though some may be). I would not trust someone’s recommendation if I know or feel that they have something to gain. This is actually how I usually make my decision whether to buy something based on the recommendation of others. I tend to trust my family and friends more than the salesperson whose commission depend on how much they sell. However, I would love to get pay for my recommendation that would be great just to be able to earn that extra bucks. In the end weight both the pro and con of both side, I would say that reviewers should not get compensated for their recommendations because they did it willingly to “help” others. They can just earn karma point and knowing that they have helped someone else with their recommendations.

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