The rise of user generated content (UGC) has brought a new world of valuable content that companies now use to market themselves, as well as reviews that help companies gain (or lose) customers. The dark side to this however is the risk of negative reviews or even fake entries. Even major retailers like Amazon are facing these issues, as some users try to game the system by giving buyers incentives to post positive reviews.
One company working to address the negative or fake UGC problem is getting a big round of funding from investors. Today, Tel-Aviv and New York based Yotpo announced a $22 million Series C round led by Bessemer Venture Partners.
Yotpo's product works to help businesses better engage existing and prospective customers through reviews. By curating the process for submissions, the company aims to increase the amount of positive feedback from customers. The solution involves data and analytics. The platform sends the customer a request for review at "just the right" time, which enhances the chance that he or she will write a positive review.
The new funding round will help the company expand its business globally, as well as target a growing enterprise market.
"In the upcoming months, we'll begin our global expansion with multiple offices outside the US and Israel," says Yotpo CEO, Tomer Tagrin. "This funding allows us to innovate our product and penetrate the enterprise market at a faster rate. We'll also use the resources to hire 250 more people and open global offices."
Content such as blog posts, comments, product reviews and even YouTube videos have increasingly become a staple for startups trying to enhance their brand value. According to a study by Duke University, businesses expect to spend at least 13 percent of their marketing budgets on social media, and this is expected to grow significantly in the short term. For retail businesses, reviews are perhaps the most relevant and accessible means of enhancing brand equity.
Along with the funding, the company has also appointed former Salesforce Marketing Cloud executive Jeff DiBartolo as Vice President, and Bessemer partner Adam Fisher as a board member.
The round brings up Yotpo's total funding to $50 million, after several rounds of angel, venture and institutional funding.
"The funding round gives us access to the unique expertise Bessemer has in scaling SaaS companies," Tagrin said.
The rise of social media and UGC has had a significant impact on how businesses run their marketing, advertising and sales in the past decade. It's thought that more authentic reviews help businesses establish better trust and rapport among customers.
"Yotpo is answering the need many enterprise businesses have to collect and amplify content from their customers as a means of increasing traffic, trust and sales," says Fisher.
With the line between traditional advertising and social media continuously becoming blurred, businesses are turning to more engaging types of content in order to attract attention and generate conversions. User generated content like reviews help improve the trust factor among brands, especially given that as much as 92 percent of customers turn to word-of-mouth recommendations from friends or even other customers.