Consumer ratings through online reviews have become an intriguing marketing avenue, one that gives managers direct insight into word-of-mouth and provides a forum for positioning their product. But first they should consider that not all ratings are the same.

The influence of online consumers reviews has been a matter of debate. Some researchers suggest that they sway consumer purchasing decisions, others that they merely reflect already-established preferences. Xiaoquan (Michael) Zhang of HKUST and co-author Feng Zhu suggest the work to date has been inconclusive because it focuses mainly on the average effect of the reviews, rather than the impacts in different contexts.

They look at video games and, instead of averaging out the reviews and their impacts on sales, they consider the different impacts based on the popularity of the games and the Internet experience of consumers. Both are found to be factors in whether an online review will influence a purchasing decision.

"We show that product- and consumer-specific characteristics affect consumers' reliance on online consumer reviews. The results imply that firms' online marketing strategies may not be effective for all types of products even if they are in the same category," the authors say.

Their study shows that reviews have the greatest impact on less popular games and among consumers with greater Internet experience, because there are fewer alternative sources of information about these games and people with Internet experience are more likely to use and trust reviews from this source.

The findings are based on tracking sales of 220 video game titles for Xbox and PlayStation2 consoles from October 2000 to October 2005, and contrasting these with reviews from March 2003 to October 2005. (March 2003 was when GameSpot.com, a popular video game site, started publishing player reviews of games.)

A higher average rating in online consumer reviews and a higher number of reviews has a positive effect on sales of online games. However, popular games are less affected than less-popular games, perhaps because popularity itself is seen as a signal of quality. Players wanting to know if a relatively unknown game is worth playing have to look for other signals, such as reviews.

The impact of online reviews is also greater over time and less influential in the early phase of a game's life cycle, which is typically the highest-selling phase.

The authors suggest marketers of less-popular products could consider allocating resources towards managing online consumer reviews.

"Because of the scarcity of available information about niche products, even one negative review can be detrimental. Superior online word-of-mouth translates more easily into sales for niche products and thus the existence of online review systems gives a great incentive for niche market producers to exert efforts to maintain good reputations," they say.

The findings are especially useful given the shift in the economy from a relatively small number of mainstream producers to a growing number of niches, they add.