Today we are announcing one of the biggest turning points in our company since we’ve started. This may start to sound dramatic, but I believe we are the beginning of a tectonic shift for manufacturers’ channel marketing and advertising. Today is the official launch of BrandVoice, the first “User-Generated Channel Marketing and Advertising” program whereby manufacturers can catapult product sales and brand equity through the syndication of user generated content to retailers.

Let’s start this with what we’ve learned. It’s been nearly three years since the public launch of Bazaarvoice. We and our retail clients have discovered so much about the demand and effect of customer-generated content.

We know consumers want to hear from others like them. In fact, they demand it. Jupiter and Forrester report over 70% of customers seek reviews when shopping online. Forrester found that the number of online shoppers reading reviews has doubled year over year. And Jupiter reports that over 60% of people who buy offline had researched online, thus reviews impacts a large percentage of offline purchasing as well.

We also know customer content affects the top and bottom line for retailers, driving dramatic improvements in online conversion, average order value, search traffic, returns, advertising effectiveness, and customer satisfaction. Together we’ve learned that more customer content equals more impact. 25 reviews on a product can have up to 400% higher conversion than if it has five reviews. Products with more than 30 reviews see a 49% increase in time on that product page. Many of our clients are leveraging the customer voice to not only effect conversion on their ecommerce site, but also to impact search advertising, print advertising, catalog, product selection and much more. We expect this trend to accelerate. See the abundance of research, stats and case studies.

So, consumers want content from other customers because it helps them make a purchase decision. Retailers want customer content because they know it helps them sell products. However, looking across over 200 retail clients, we see that less than 20% of any manufacturer’s/brand’s products have reviews. Where can retailers and customers get more customer content?

BrandVoice is a new Bazaarvoice program which enables brands and manufacturers to collect customer-generated content (such as reviews, product answers, or stories) on their site and syndicate that content into retailers. As you will see later, we have proven this program has a truly dramatic impact on that brand’s sales, as well as brand equity.

Today Bazaarvoice serves over 50 manufacturer brands, some which sell direct and some which don’t. Shown are just some of the brands Bazaarvoice serves (see client list).

These brands were later to adopt customer content on their site than retailers, for obvious reasons. But in the last year brands have become a growing percentage of the Bazaarvoice client base. Manufacturers are realizing they need to embrace transparency in today’s customer-driven economy. They’ve also realized, as retailers have, that over 80% of reviews are generally positive. And the negative reviews are ‘gifts’ to help them improve products to be a stronger company.

Now, with the announcement of BrandVoice, we can enable our client network of over 200 retailers who can opt in (for FREE) to receive reviews, customer-generated Q&A, or stories directly from customers who contribute content on the manufacturer’s site. This is the first “user-generated channel marketing” program (as we’re calling in) in the market. And unlike typical co-op and MDF (market development funds) programs that push a brand’s logo or marketing message, retailers can now promote the authentic word of mouth into the shopping experience. And get measured results.

Let me give you an example:

In February 2008, Kingston launched Bazaarvoice Ratings and Reviews solution on their site. Thousands of customers who visit their site could write a review on memory sticks. Meanwhile, Office Depot (also a Bazaarvoice customer of Ratings & Reviews) was also collecting reviews on Kingston. By October 2008, only 66% of Kingston products on Office Depot had reviews, averaging only one review per product. Then, last month, Bazaarvoice matched the products and syndicated reviews from Kingston.com into OfficeDepot.com’s retail site.

The results were as follows:

• Reviews for Kingston products catapulted to 10 per product from one, compared to the category average (i.e. their competition) of 1.5 reviews per product
• Conversion on Kingston products that had syndicated reviews shot up 92% that month
• Even conversion of Kingston products that still didn’t have reviews went up 35%! (we’ll come back to this)

The online sales impact is impressive. And if findings from studies holds true, Office Depot should see higher customer satisfaction scores. Also, both Office Depot and Kingston should see better upsell on these products as well as lower returns.

Let’s expand on that last finding…conversion on Kingston products that didn’t have reviews went up 35%. It tells us there is a “halo” effect of shoppers seeing so many Kingston products with reviews. Visibility of so many products that are highly reviewed, in turn, lifts conversion on other Kingston products. Thus the increased review penetration dramatically lifted the brand equity for Kingston. Now, imagine that impact after Kingston reviews are syndicated across multiple online retailers that carry their products.

Over 70% of shoppers seek review reviews before shopping. These shoppers are closer to the point of purchase. The volume and quality of the customer voice on a brand becomes a brand’s competitive differentiator. It becomes the “uncommoditizer” effect for the brand, if I can make up a word. Compare this to search advertising: further from purchase, more intrusive, more ignored, and less scalable.

You may be surprised at how many reviews these brands could solicit from customers coming to their site. We did some analysis for a brand to look at review volume for their brand (all their products) across three major retailers. After the brand launched Bazaarvoice Ratings & Reviews on their own site, within six month they collected 4X the number of reviews compared to the three retailers.

We performed the same syndication for Dell into a major retailer, and they saw reviews per product go from 32 to over 1,100, compared to a category average for laptops of 21. For Epson, their BrandVoice syndication grew reviews per product to 33 from one, compared to their competitors who averaged one review per product.

The impact of this program doesn’t stop at the web site. As mentioned earlier, through working with Bazaarvoice Community Managers and sharing best practices, retailers are getting more sophisticated at putting customer content in the center of their entire marketing strategy. Top Rated products are being merchandised in navigation, search, sorting, email campaigns, catalogs, search ads, catalogs, and in store signage. Retailer marketers are changing their strategy, and the brands with more customer content are more likely to be included and visible through these strategies. So the syndicated content has a growing, amplified effect as Retailers continue to evolve towards these best practices.

The impact of BrandVoice is conceptually captured in this formula:

Salience and credibility of customer content
X number of syndication nodes (retailers accepting content)
X amplification through Retailer marketing tactics (search, filter, sort, email, advertising, etc.)

Plus, the content also lives on the brand’s site, improving brand equity for those visitors, giving valuable product feedback, and attracting natural search traffic.

These are tough economic times. Retailers are challenged to sell products amidst discerning customers. We believe customers will seek customer created content now more than ever to make wise purchase decisions. Therefore, your customer’s word of mouth becomes the most critical marketing asset you can have, in good or bad times.

From a financial perspective, the elegance of user-generated content is that it’s a growing annuity.

It is a marketing asset that blossoms and becomes working capital for your company. The net present value of a user-generated channel marketing strategy is far greater than traditional advertising, because the customers contribute content every day and the impact is multiplied through the channel. Unlike traditional advertising, there are not heavy design or agency costs or creative depreciation. Over time, costs scale compared to the return word of mouth brings. It’s possible your CFO has fantasies that marketing investments like this actually exist!