Online reputation management -- Bad news beats good news.

Bad news beats good news. It’s not fair, especially to small businesses.  

Now, we’re disinclined to defend businesses that actually deserve a bad reputation. But give people two pieces of information about someone they don’t know – one bit of positive news, and one equally negative – and they will more often judge that person more negatively than if you had given them no information at all, or so says the academic research.

More to the point, people pay more attention to bad news. We see the fruit of this effect in every negative attack ad during an election and every appeal to fear on the lead-in to an investigative story on the evening news. And we also see it in the mysterious online character assassin. Take a normal person, add the audience of the Internet and anonymity, and presto: you have a maniac, or a Philadelphia Flyers fan.

Michael Fertik illustrates the anonymity problem for small businesses with a story about two doctors in the early days of his online reputation management firm, ReputationDefender. One day, a plastic surgeon called to complain about libelous and false reviews. “He said that there’s this dermatologist down the hall from me that I think is making up reviews,” Fertik said. “A week or two or three or five go by, and we get a call from a dermatologist with reviews without correlation to symptoms.”

It was the dermatologist the plastic surgeon thought might be trying to steal his business, Fertik said. “It appears that these guys were at each other’s throats,” Fertik said. “If doctors can do it, anyone can do it.”

The market for online reputation management is expanding at the speed of an Internet flame war. Fertik helped form ReputationDefender in Louisville in the spring of 2006 and moved the company to Redwood City, California, about a year later. (ReputationDefender is a vendor partner of Company.com.) The company offers products to help its clients watch what people are saying online about themselves, their families and their businesses, and to use search engine optimization and other tools to diminish or eliminate negative information about ReputationDefender’s clients.

Malicious reputation attacks have been more subtle and more intelligent, he said. “They’re more credible. You can’t be screechy. You have to be sober.” And the number of inquiries he gets from businesspeople hoping to use his services to smear competitors – a practice ReputationDefender does not do – has been rising.

Fertik’s firm is still gathering market data about how much money small businesses might lose from a smear campaign, but he has a guess: existing business might remain relatively stable, but new business from the Internet drops by about 50 percent, depending on the industry. Service companies like doctors and electricians will suffer more than other companies, he said.

The online smear has spawned more than one lawsuit. For example, a new limo service based near Scranton, Pa., filed suit against a competitor earlier this year. The suit contends that derogatory and fictitious customer reviews began popping up, tagged "Worst Limo Service Ever," "I wish I could Get My Money Back," and "They Ruined Our Trip,” a month after Feel Good Limo, Inc. began offering services.

Yelp has come under particular scrutiny of late. At last count, three separate class action lawsuits accuse the review site of gaming reviews on behalf of its advertisers. One suit claims that Yelp filters out bad reviews after its sales staff land an advertising contract, but allow bad reviews to remain and good reviews to disappear for businesses that won’t advertise. Yelp’s CEO, Jeremy Stoppelman, denied the accusations in recent interviews. He said that the plaintiffs don't understand how Yelp works, and that the connection between changes to reviews and contact from Yelp salespeople are often coincidental – a consequence of a small business getting traction on the site.  

Fertik reserved comment about the Yelp suit specifically, but noted that “the suit may be the most important small business story this year.”

People may have a bias toward overvaluing negative information, but Google’s vaunted math-driven search algorithm may have a kind of bias toward overvaluing the negative as well.

Blog entries, for example, tend to have more negative content than the Web at large, Fertik said. And blogs also tend to contain more links to other sites, and may also have more links back. “The slamming tends to be as explicit as possible, with specific word choice,” he said. “The fidelity of the keyword matchup and the negative review tends to be higher, only by a few percentage points.” The extra blog links can increase the weight of those comments in search engine algorithms, he added.

Don Sorensen, owner of reputation management and search engine optimization company Big Blue Robot, has seen the same effect. “A company, with hundreds of thousands of happy customers, can have a handful of negative reviews that can play havoc with a company’s reputation,” he said. “You can move some stuff down, but you can’t kill all of it. They can hold the whole company hostage.”

We’re hard-wired to overreact to negative information. An oft cited 2001 study of negativity bias by Roy Baumeister, et al, “Bad Is Stronger Than Good” argued that bad impressions and bad stereotypes are quicker to form and more resistant to disconfirmation than good ones, as a general principle across a broad range of psychological phenomena.

The authors postulate that it’s an inherited survival trait. “We believe that throughout our evolutionary history, organisms that were better attuned to bad things would have been more likely to survive threats and, consequently, would have increased probability of passing along their genes.”

This is what you’re fighting against when a nameless jerk slimes your company unfairly on RipOffReport.com or another site. A clean slate is a major advantage, Sorenson said. “If you’re a company that’s out there and don’t have negative reviews out there, you should do anything you can to keep it that way, especially if you’re doing local business.”

Fertik says companies need what he calls “a protective layer of Google juice.” ReputationDefender does this by publishing content about a company on pages with high search engine optimization power. The process has a strong mathematical component, he said. Like Google, ReputationDefender hires PHDs in disciplines like physics, artificial intelligence and robotics to navigate the algorithms search engines use to determine which Web sites will rise to the top of a search.

“Your Google results define you,” Fertik said  “Online reputation management is being proactive. It is not the practice of waiting until someone slams you to solve a problem. It’s ownership of your search result.”

“There are a couple of things we do not do. We do not pretend to be our client’s clients and we do not pretend to write reviews. There’s enough you can say that’s neutral that can effectively convey trustworthiness without having to blow smoke.”