When it comes to selling products on the Web, the more consumer reviews a product attracts, the more conversions and sales it sees as a result. This is why PowerReviews has built a social commerce network of more than 23 million reviews across 5,500 sites, including Staples.com, Gap.com, and ToysRUs.com. Today, PowerReviews is announcing the launch of two Facebook products that allow brands and retailers to leverage the social network as a platform for driving sales by making the process of online shopping and product discovery more social.

PowerReviews’ first new product, “Facebook Discovery”, enables consumers to engage in conversations around particular products, categories, and reviews and have them pushed directly into their newsfeed, hopefully creating the opportunity for viral marketing — and not wall spam. Users of Facebook Discovery can also follow particular reviewers of interest, so that all of their future reviews are published to their wall, or they can opt in to receive news of trending products in a daily product review, or ask friends friends what products they should choose via a question or poll.

The startup’s second product launching today, “Facebook Community”, gives brands and retailers the opportunity to foster community among their customers — both on the product as well as their Facebook fan pages. In terms of brand marketing, Facebook Community allows brands to reward their ambassadors, while at the same time sharing feedback and advice among the community. The product also gives brands the ability to view the top 100 reviewers in order to identify their most active ambassadors and supporters.

What’s more, consumers can connect their Facebook profiles to their reviews to create a suped up, uber profile designed to give identity — and added credibility — to their reviews for their friends and other shoppers. their Facebook profile to their reviews creating a rich onsite profile. This increases the credibility of their reviews for other shoppers. As Erick wrote in out last coverage of PowerReviews, social sharing is a big assist for businesses, as each share is worth $15.72 in incremental sales.

PowerReviews has raised just over $37 million in outside investment to date, from a variety of VCs and angels, including Menlo Ventures, Lehman Brothers, and Draper Richards.

It’s a simple law of e-commerce: the more consumer reviews there are on a product, the more sales will result.  ”As review numbers go up, conversions go up, and SEO traffic goes up,” says  Cathy Halligan, SVP of sales and marketing for PowerReviews (and former CMO of Walmart.com).  PowerReviews powers 23 million reviews across 5,500 sites including Staples.com, Gap.com, ToysRUs.com, and eFaucets, and is adding about 1 million reviews a month.  But all of these reviews are siloed on each individual site.  Today, PowerReviews is making it possible for brand sites to syndicate their reviews to e-commerce sites for the same products through a new product called BrandShare.

Consumers often go to brand sites to do research and leave reviews there, but most brand sites don’t actually sell their own products.  PowerReviews already has a product catalog across its network of 35 million products. It will now take any reviews, whether they were written on its software, a competitor’s, or a home-grown review system and allow brands to syndicate them to existing PowerReviews customers.

For products that don’t have any reviews on a retailer’s site, this is a way to fill up those pages with reviews.  Halligan says that going from zero reviews to one review with 4.2 stars or better improves conversion rates (sales) by 20 percent.  And while it only takes 7 to 10 reviews to get a stable star rating, keeping reviews fresh helps with search engine optimization.  Getting people directly to a product page through search thanks to an indexed review has an outsized impact on sales conversions as well.

Social sharing also helps.  People can share their PowerReviews on Facebook.  And each share is worth $15.72 in incremental sales.

PowerReviews, which launched in 2007, provides retailers and brands with the ability to collect, organize and analyze comments and other user-generated content. The company also recently launched an integration with Facebook to bring the consumer’s social graph into the product review process. Customers include Staples, REI, ESPN, Callaway and Jockey.

And in April, PowerReviews was awarded its second patent relating to its SaaS commenting product for brands, which makes it possible to display content on brands’ product pages that can be crawled by search engines.

PowerReviews also powers a consumer-facing site, Buzzillions.com, that aggregates reviews from its partner retailers. The site includes over 15 million product reviews. PowerReviews says that it is growing by around 1 million reviews per month.

The new funding will be used to extend product development efforts and expand sales operations.

The additional funding will be used fuel customer acquisition and for new product development. The company’s original products let retailers include Amazon-like product review features into their websites. Last year, PowerReviews launched two more social technologies for retailers to integrate: BrandConnect and Social Megaphone. BrandConnect tracks what consumers are saying about a company and/or brand on the social web and Social Megaphone allows customers to post their reviews to Facebook, Twitter and blogs. Last fall the company also brought on a new CEO, Pehr Luedtke.

PowerReviews, which launched in 2007, also powers a consumer-facing site, Buzzillions.com, that aggregates reviews from its partner retailers. The site includes over ten million product reviews. Customers include Staples, Drugstore.com, Walgreens, Diapers.com, Callaway and Jockey.

The company let retailers include Amazon-like product review features into their websites, for free. PowerReviews then aggregates reviews from their client retailers on their own customer-facing site called Buzzillions.

The company had at least 42 employees before the layoffs. We’ve contacted them for confirmation and have added them to the Layoff Tracker.

Update: email from Andrew Chen, CEO:

Hi Mike,

Thanks for contacting us…although I wish that we had time to respond before the post. However, since our clients/partners will be asking the same question, this is a great opportunity to diffuse any inaccurate rumors.

The truth is that we just enacted a series of actions to reduce our BURN RATE by around 30%, not headcount. This was achieved primarily through reductions in contractors and administrative expenses. It is true that Jay Shaffer is no longer at the company full-time, as we have consolidated the marketing activities of Buzzillions.com and our Retail Solution. In fact, no development, IT, product, or client support staff were affected, and we have hired several engineers in the last couple of months.

Thanks…and please feel free to contact me directly if you ever have questions!

-Andy

P.s. If you’d like to know why we are so optimistic, we just relaunched Buzzillions.com with 3.5M+ reviews (up from 1M in Jan) and are getting amazingly positive feedback from users

Since its launch in April 2007, the number of reviews and products offered on Buzzilions.com has tripled. Today, the site offers more than 400,000 reviews on 125,000 products from over 1,000 ecommerce sites. PowerReviews says that the traffic driven through Buzillions also converts at nearly twice the rate of other shopping portals. In April we compared PowerReviews to Bazaarvoice and other competitors – PowerRevies main advantage is easy integration, and a free version of the product.

User generated reviews help sales at ecommerce sites, but few startups have the technical and product resources to build this internally. PowerReviews, Bazaarvoice and others have stepped in to fill this need. Aggregate Knowledge and Loomia address different needs in the ecommerce space – helping these companies merchandise and recommend products to users based on behavior.

Today, product reviews are largely concentrated at big hubs like Amazon, CNET Reviews and Epinons (owned by eBay). But lots of startups are trying to innovate and get a piece of this market, too. We’ve written about Wize, which scrapes and analyzes reviews from sites around the web (mostly Amazon and epinions), turning mostly unstructured content into a 1-100 score. We’ve also looked at many others, including Retrevo, Viewscore, Shopwiki, Metacritic and Kulist in a comparison post. All have good features, but it’s hard to stand out from the pack and get enough traction to lead the space.

PowerReviews is taking a different approach. There are many retailers that just don’t have the resources to build Amazon-like product review features into their websites. PowerReviews gives these merchants the ability to add reviews to their sites, and they don’t charge anything for it. Another startup we’ve covered, Bazaarvoice, also provides retailers with review software, although Bazaarvoice pricing starts at about $2,000 per month for smaller sites. Since PowerReviews is free, they have a big edge.

To date, 120 merchants are using the PowerReviews software. 140,000 or so reviews have been created for 45,000 unique products.

PowerReviews is willing to give away their software to merchants, but in return PowerReviews have the right to aggregate that review data and present it on their own consumer facing review site, Buzzillions.

Here’s the brilliance of the PowerReviews model. They then turn around and sell traffic from Buzzillions right back to their merchant network, on a CPC or CPA basis.

I don’t believe I’ve come across a startup before now that manages to use data, created at a partner site, to generate traffic that they then sell right back to the partner.

PowerReviews isn’t stopping there. They are offering content sites a white label version of Buzzillions in exchange for a revenue share. Their hope is that these white label sites will generate enough traffic to supply PowerReviews with a business model.

There is more to PowerReviews than an elegant business model. Their reviews are highly structured and based on 8,000 unique product templates. When users write reviews they are asked to supply answers based largely on tags, and PowerReviews suggests tags that previous users have chosen. When a new users is looking for product research, they are asked a to click on tags that describe what they are looking for. PowerReviews is then able to recommend a few products out of a category that might suit them best. It works surprisingly well – to try it, go to the digital camera page on Buzzillions and answer some of the questions in the green box center top.

Of all the new product review startups mentioned in the second paragraph above, Buzzillions seems to have found the most unique business model. Whether it will be successful or not is yet to be seen, but we’ll be checking in with them periodically for updates.

The company raised $6.2 million from Menlo Ventures and Draper Richards in December 2005.