Introduction to the Research

General Introduction

It is not assumptive to claim that trust is the key ingredient of social relationships, communications and economic transactions. For Luhmann (1979), one of the most influential researchers in the domain, trust is nothing less than a general prerequisite for human behaviour, as it is “a basic fact of social life” (p. 4). For the sociologist, the absence of trust would impede us in undertaking normal everyday activities, such as talking with others and making new friends. Trust, its causes, nature and consequences, is recognized as a critical concept and acknowledged not only by sociologists; academics from a wide spectrum of intellectual disciplines, such as psychology, economics, marketing and communications, have contributed to our current body of knowledge. For scholars in these fields, investigation into the conceptual nature and the construct’s measurement often lie at the very heart of their research. A profound operationalization of the construct is here recognized as a necessity for subsequent scientific research. While the view of the concept often differs from discipline to discipline, trust has commonly been found to have a vital role in human interactions and effective interpersonal communication - whether it takes place offline or online.

Since the early 2000s, consumers are increasingly turning to the Internet to source information, as this medium furnishes consumers with radically new opportunities to interact online and conduct pre-purchase information searches (Brown, Broderick & Lee, 2007; Hu, Bose, Gao & Liu, 2011; Jepsen, 2007). These new opportunities are often associated with the concept of Web 2.0, which basically describes the development, dissemination, and sharing of user-generated content (UGC) and the decline in importance of other sources. Consumers’ usage of Web 2.0 applications today is mainly motivated by changes in their interests, needs, and behaviours. These new tools have changed the way people search, find, read, gather, share or consume information, as well as the way people communicate with each other and collaborate to create

© Springer Fachmedien Wiesbaden 2017

W. Weitzl, Measuring Electronic Word-of-Mouth Effectiveness,

DOI 10.1007/978-3-658-15889-7_1

new knowledge (Casalo, Flavian & Guinaliu, 2011). We are witnessing a radical change in consumer habits and profound knowledge about this trend has become an imperative for all marketers worldwide.

The essential difference between Web 2.0 and the traditional Web is that content is generated and steered by consumers; moreover, there is considerably more collaboration amongst Internet users. During the old days of the Internet it was mostly up to institutions such as companies to provide a static and controlled content. Now, however, the web has become more dynamic, interconnected, and uncontrolled, shaped by social media and networks. It’s the consumers who produce content for others and who dominate this communication channel. Nowadays, information issued by marketers in the form of online advertising is often said to considerably lose impact to the advantage of these sources. In such an era, Web 2.0 social media applications like bulletin boards, blogs, newsgroups, chat rooms, review sites (e.g.,,, and product-, brand- or anti-brand-centric discussion forums on social networks such as MySpace and Facebook, and video channels (e.g., all furnish consumers with valuable feedback and evaluation tools (Dellarocas, 2003; Goldsmith, 2006). Contemporary consumers have found that these platforms represent an excellent opportunity to gather and share consumers’ personal ideas, preferences, opinions and experiences with manufacturers, retailers, products and services with a vast, geographically dispersed group of people, who have experience and knowledge on relevant consumption issues (Duan, Gu & Whinston, 2008; Forman, Ghose & Wiesenfeld, 2008; Godes & Mayzlin, 2004; Ratchford, Talukdar & Lee, 2001). Today, hundreds of millions of people raise their voices and contribute to social media or passively consume the statements of others (Kamplan & Heanlein, 2010). And these voices are not always positive for the marketer. In times of considerable economic downturn, individuals are regularly forced to look after their expenses and to become smarter consumers. When consumers lack own experiences, the experiences of others are often seen as a good way to compensate for information shortages and to anticipate the consequences of buying actions. As consumption takes place more and more in the public arena, others’ opinions and experiences also matter more.

Hence, consumers actively or passively engage in electronic word-of-mouth (eWOM) communication (Bagozzi & Dholakia, 2002; Casalo et al., 2011; Dwyer, 2007; Hennig-Thurau, Gwinner, Walsh & Gremler, 2004) today. In reference to earlier contributions, this thesis defines eWOM (or online customer reviews (OCR), which is here used as a synonym) as peergenerated, text-based product evaluations and recommendations made by potential, actual, and former customers about a product or company, which are made available to a multitude of consumers via postings on the Internet (Hennig-Thurau et al., 2004; Mudambi & Schuff, 2010). This definition is also consistent with the one advanced by Rafaeli and Raban (2005), who view eWOM reviews or recommendations as positive, neutral or negative information about a product released on the Internet by a consumer. Therefore, customer reviews (see Figure 1 for an example) are regarded as an often-used form of market communication or, more precisely, a variety of consumer-to-consumer (C2C) online communication. While slight variations are possible from website to website, OCR are typically characterized by an unstructured discussion of the product by a consumer which can vary considerably in length, a “star”-rating for the overall product performance or satisfaction, the user name of the consumer and, at best, accompanying information on the consumer (e.g., origin, date of purchase), date of review, and the possibility of responding to the review.

Others’ advice or recommendations about purchase-critical issues have a critical role for today’s purchasing decisions as consumers often refrain from using marketer-driven communication sources, like online advertising such as retailers’ websites or professional advice (Lee, Park & Han, 2008). This is caused by a multitude of characteristics of this information source. For instance, eWOM provides consumers with more choices and relevant consumption insights, and allows them to make quick but comprehensive comparisons. Moreover, it enables shoppers to directly communicate and exchange thoughts and ideas, as well as compare consumption experiences with other online shoppers in the electronic community who share the same interests. In contrast, online advertising is commonly seen as a less objective source of information that is biased by the interests of the company. Shopping online is often an ambiguous endeavour, frequently associated with a set of different risks; evaluating the suitability of a product that suits a person’s needs is here regularly far from clear. In such situations, individuals regularly look to others for cues (Darley & LatanBe, 1968). Online reviews are typically regarded as especially valuable cues, as they offer key information about market offerings and thus typically facilitate purchase decision proces ses as a whole (Ku, Wei, & Hsiao, 2012).

Figure 1: Typical Online Customer Review

The phenomenon that more and more consumers consult online reviews is supported by several market studies. For instance, a Deloitte study (Deloitte, 2007) shows that consumers have been used to turning to eWOM in the form of online customer reviews and recommendations for many years. Through this action, consumers build up their arsenals of knowledge and satisfy their need to research product information online before making purchases and sharing experiences regarding the product after its using it. According to this (quite old) study, almost two thirds (62%) of consumers read product reviews created by fellow shoppers and made available on the Internet. Another (more recent) study provides similar figures, as 70% of consumers consult reviews or ratings before purchasing (Businessweek, 2009). In addition, Deloitte’s (2007) study provides evidence that these reviews exert strong societal and personal influence, as 82% of these consumers state that there is a direct linkage between their final shopping choice and the consumer reviews consulted, either influencing them to buy a different product from the one they had originally been thinking of, or confirming the original purchase intention. Another study has found that 77% of online shoppers consult reviews and ratings when doing online shopping (McGuigan, 2008). These facts correspond roughly with a more recent study demonstrating the increasing importance of reviews. Here, 91% of respondents mentioned that they consult online reviews, blogs, and other user-generated content before making a purchase; of these, 45% say that their choices are affected quite considerably by reviews placed on social networking sites by individuals whom they follow (Harris Interactive, 2010). In a large-scale survey of online consumers, Kee (2008) found that 22% of the respondents say that they always read online reviews before making the final purchase decision and 43% have indicated that they visit ratings and reviews most of the time. The same study concludes that more than 90% of shoppers deem online reviews to be extremely or highly useful. Forrester predicts that over 50% of worldwide retail sales will be influenced by Internet content (i.e., online reviews) by 2014 (VanBoskirk, 2009). When consumers nowadays go online, they can hardly avoid online customer reviews and recommendations. 75% of all Internet users say that they have created or consumed some kind of social media content, including product reviews (Kampla & Haenlein, 2010). Only 12% say that they take no notice of them at all (Anderson, 2013b). While demonstrating the importance of customer online reviews today, these findings also indicate that perceptions and usage patterns concerning this information source also vary among segments of customers.

The increasing popularity of communication between consumers on product search and shopping choice behaviour is also mirrored by the recent success of Internet sites such as,,,, and, which are regarded as having the fastest-growing Internet clientele for years (ComScore, 2007). These third-party product-review websites have introduced opinion-sharing communities in order to enable the exchange of customer reviews and consumption experiences about a tremendous amount of products, as well as companies (Ku et al., 2012). But OCR success is also bound to the success of social platforms such as Facebook and Twitter, which are used more and more as recommendation channels (Anderson, 2013b). Due to the possibility of providing personalized recommendations from known or highly reputable people, it is very likely that social platforms will play a key role in the recommendation business. And it is quite reasonable to argue that they will radically change online purchasing with new powerful review tools in the near future.

An increasing number of companies are becoming aware of the relevance of eWOM communication for their own market success (e.g., Thomson, 2003). Consequently, several companies have put forward initiatives to introduce Web 2.0 applications to streamline their business models to the new communication demands and offer added value to their customers by including public voice in their advertising strategy. These companies regularly want to benefit from the two worlds by integrating them: marketer-driven online advertising, as well as consumer-based advertising. Meanwhile, it has become a common practice for retailers (e.g.,,, and manufacturers (e.g., Nike, Levi’s) to establish their own opinion-sharing communities and offer shoppers the chance to participate actively by posting their thoughts on and experiences with products and brands they have recently bought or are interested in. (Casalo et al., 2011). Leading online shops such as have been inviting shoppers to submit product reviews for many years, while others have started to offer this communication instrument more recently or are about to launch new community platforms. There are also examples where retailers abstain from providing product information supplied by themselves in favour of online reviews. Firms have acknowledged that customer reviews are a valuable form of third-party evaluation, able to increase company reputation and trust in online shopping: 60% of retailers already use customer reviews on their websites (, 2009) and 97% of the top 250 e-retailers are on Facebook (Scarpello, 2012). Other firms have decided to purchase customer reviews from or other retail sites and to publish them in their own online shop (Mudambi & Schuff, 2010). Consumers are already used to accessing conversations with fellow shoppers on retailing websites: 58% read online reviews on shopping sites and 47% visit them on company websites (Lightspeed Research, 2011). One can say that, due to current consumer demand, the inclusion of social web features is already an imperative for every online shop owner.

It seems that retailers have good reason to consider reviews in their communication strategy, as research has shown that online reviews can steer consumer behaviour. In recent years, a significant number of studies have been published which all strive to investigate the effectiveness or persuasiveness of eWOM messages (see Cheung & Dhadani, 2012 for a review). They all more or less agree that customer reviews can be a very powerful marketing force (under certain circumstances). For instance, prior studies indicate that customer reviews can have a positive influence on sales (e.g., Archak, Ghose & Ipeirotis, 2011; Chevalier & Mayzlin, 2003; Clemons, Gao & Hitt, 2006; Formann et al., 2008). More specifically, by investigating the impact of online book reviews at and, Cheavalier and Mayzlin (2006) find that online reviews have a positive effect on book sales, Clemons et al. (2006) identify a similar impact on the growth of craft beer sales, and Reinstein and Snyder (2005) conclude that reviews are able to increase customer demand for movies. Such a relationship has been found in the same context by Liu (2006) and Basuroy et al. (2003). These findings suggest that reviews have the most influential power if the reviewed products are intangible in nature and can only be evaluated upon consumption (e.g., belletristic books) which holds true for experience products (Korfiatis, Garcia-Bariocanal & Sanchez-Alonso, 2012). Other studies indicate that (positive) consumer reviews and ratings can lead to increased buyer trust in the exchange partner (Ba & Pavlou, 2002; Pavlou & Gefen, 2004), as well as price premiums for the retailer. In addition, the presence of online reviews can impact the overall evaluation of a website’s usefulness and perceptions of social presence (Kumar & Benbasat, 2006). Additionally, consumer feedback systems can enhance website traffic, as well as the time a consumer spends on the website (i.e., “site stickiness”) (Mudambi & Schuff, 2010).

Researchers have investigated the causes that make online customer reviews regularly so influential compared to other forms of market communication. They agree that its impact is merely the result of common features that eWOM and traditional (offline) word-of-mouth (WOM) share, but it is also the effect of distinctive characteristics which this type of communication has in common with its marketer-generated counterpart (online advertising), as well as unique features of its own. WOM communication has long been recognized by researchers and practitioners as an important element of marketing. The rich body of traditional communication theory considers WOM to play a key role in purchasing decisions by directly affecting shopping choices (Arndt, 1967; Katz & Lazarsfeld, 1955; Olshavsky & Granbois, 1979; Richins & Root-Shaffer, 1988). Here, WOM conveys valuable information concerning product characteristics and performance, as well as the social and psychological consequences (risks) that typically arise out of the purchase decision. Therefore, it is a potential consumption risk reducer. Additionally, past research describes WOM information as “the most powerful form of marketing communication” (Ekici, 2004) and hence it is seen to be more influential when compared to traditional marketing, including personal selling and advertising (Katz & Lazarsfeld, 1955). This is mainly attributable to the fact that WOM is assumed to be more reliable, credible and believable, as it is communicated by people that are not marketers of the product. As eWOM is also typically generated by other consumers, the lack of commercial selfinterest in consumer online reviews and recommendations makes the conveyed information generally more believable to the reader. So trust is essential here. However, other characteristics apply that make its impact on consumer behaviour distinctive. For instance, consumers usually collect WOM about a market offer from a very restricted number of individuals (e.g., one or two) (Zeithaml & Bitner, 2000). In contrast, on the Internet, products and services may be discussed by a dozen or typically even more mostly anonymous customers who possess a diversified background and different motivations (Litvin, Goldsmith & Pan, 2008). Hence, in the online environment, there is typically a greater amount of additional information available to the shopper than from traditional WOM. As a consequence, consumers are often confronted with a multitude of positive and negative (i.e., ambivalent) reviews (Xie, Miao, Kuo & Lee, 2011), endangering trust. However, eWOM is likewise valued for its non-commercial character and consumers rely on other consumers’ product information, as it is deemed credible and trustworthy (Godes & Mayzlin, 2004; Mayzlin, 2006). While consumer trust in online reviews may be limited compared to traditional WOM, shoppers are typically more susceptible to 6

eWOM than to market communication issued by companies (Bickart & Schindler, 2001; Trusov, Bucklin & Paulwels, 2009), which suffers from a lack of credibility.

Second, WOM typically means information and opinions gathered from acquaintances (e.g., friends and relatives). Here, the persuasiveness of information is attributable to the close links or “ties” that exist between the person giving the information (i.e., the reviewer) and the receiving consumer. In this context, Duhan et al. (1997) discuss the concept of “tie strength”. A tie is regarded as being weak where the recommender is not known by the consumer or has only weak relationships with the consumer. In contrast, a strong tie exists in cases when the shopper knows the reviewer or recommender personally or “feels” that he does. While most WOM originates from people with whom the shopper shares strong ties, eWOM messages are typically comments from invisible and anonymous strangers (weak ties). As a result, consumers have some concern over the source credibility (Kelman & Hovland, 1953) of eWOM, as it is often not as readily established as WOM (Park, Lee & Han, 2007). Here, the reader is generally not familiar with the credentials of the reviewers (e.g., knowledge, motivations), which means that his/her reactions to the reviews are largely shaped by the consumer’s general attitudes towards this information and the population of reviewers, besides some degree of situational inference of credibility information. This is done through cues that are present within the review or exist in its environment. For example, the positive source credibility effect, which aids traditional WOM coming from an impartial source, can be diminished in the case of eWOM when it is featured on a site that sells the product at the same time. Or in other words, a context effect is said to exist. Accordingly, reviews on independent third-party websites are more likely to be preferred by consumers, compared to the platforms which are clearly operated by a business entity which has a vested interest (Senecal & Nantel, 2004). To cope with the latent uncertainty of review source credibility, some shopping portals and online retailers require reviewers to provide personal information which enables the consumer to “identify” the review creator or at least make some inferences (e.g., name, state of residence, gender). This should foster the perceived “ties” between participants.

Third, prior research provides evidence that the strong impact of WOM communication on product judgements and purchasing decisions can be partially explained by the fact that the information is received in a face-to-face manner and hence is more accessible than information presented in a less vivid way (Herr, Kardes & Kim, 1991). Consumers can easily interact verbally with the individual who creates WOM. This enables him/her to obtain detailed contextual insights about the experience with a product or service provider. This furnishes consumers with the opportunity to make more confident attributions for and judgments about products and services (Weiner, 2000). In contrast, eWOM comes from a virtual source and is an asynchronous activity, and contextual information is often much less accessible. Interaction possibilities are also restricted. In everyday conversation, people typically communicate largely through non-verbal language and visual cues, including hand gestures, eye contact, and smiling.

The absence of such contextual information and the reviewer’s anonymity make eWOM messages often appear more nebulous to consumers. This leads to the perception that eWOM is less vivid.

Criticism of the power of online reviews to influence consumers in their buying decisions is regularly based on the potential to fake seller postings as customer or independent reviews. Clearly, retailers have a strong incentive to disguise promotional reviews as legitimate eWOM communication in order to influence consumers’ evaluation of their products (Mayzlin, 2006). This manipulation can be easily carried out by interested parties - and the educated Internet user knows that. There is no mechanism which ensures eWOM quality. This is one reason which makes the assessment of eWOM reviews and recommendations generally tough for the consumer (Smith, Coyle, Lightfoot & Scott, 2007). Everybody on the Internet - including marketers - is qualified to anonymously post considerate product reviews on products. But it is also possible for companies to enlist or hire an “impartial” reviewer who has been paid or has received another form of incentive in order to provide a positive review. At the same time, a “warning” review may be a competitor’s posting on the brand striving to hurt the opposition. And it is true that a wave of negative eWOM can enduringly harm a brand’s image. Such unethical business practices are, however, quite common today as the trade press regularly uncovers unethical review practices (e.g., Moe, 2012; Tuttle, 2012) or “astroturfing” incidences. For instance, the media reported the dishonest marketing tactics of a popular coffee machine producer that encourages an employee to post very positive reviews about a number of the company’s products on (Pilon, 2009). Similarly, a considerable number of “glowing” reviews on a well-known hotel booking website turned out to be the product of contributors paid by hoteliers (Fernandez, 2011). In such cases, online reviews have essentially become nothing more than another kind of marketer-to-consumer advertisement. This effectively defeats the original purpose of enabling eWOM to influence consumers in their decision-making process as the content added is no longer independent, objective or credible (Bray & Schetzina, 2006). However, consumers are becoming more and more aware of this kind of manipulative practice and many consumers are sceptical about the information conveyed in eWOM messages (Baumbauer-Sachse & Mangold, 2013; Senecal & Nantel, 2004). In the eyes of these consumers, eWOM is nothing more than market communication intended to steer and manipulate individuals in the interest of the consumption system. A market research study by Jupiter Research suggests that only 21% of consumers actually rely on information provided in product reviews on social networking sites such as Facebook or MySpace (Wassermann, 2006). In 2010, 57% of shoppers trust customer reviews as a research source, but 35% question whether they are biased (Mediapost, 2010). A more recent study demonstrates that, despite the differentiating characteristics of eWOM and WOM, 79% of Internet users “trust” online reviews as much as personal recommendations (Anderson, 2013a). These data would suggest that consumers on average rely more and more on information given in reviews and for the most part disregard threats of message integrity. Assuming further that 8

the method of measuring trust in reviews is correct, the figures indicate that people value eWOM and WOM recommendations almost equally. But are these implications really correct?

The primary communication function that society has assigned to eWOM is its role of informing consumers about products, services, and service providers in order to help shoppers weigh one consumption choice against another. However, online consumer reviews can have a dual task:

(i) they provide useful and purchase-critical information, and (ii) in addition, they also act as a recommender (Burgess, Sellitto, Cox & Buultjens, 2011). Crucial for the fulfilment of both functions and for the consumers’ acceptance as an effective decision-making aid is that consumers trust the information conveyed in online reviews. Hence, the most fundamental question in evaluating the effectiveness and persuasiveness of eWOM messages is whether consumers believe what they read - or in other words - whether they really trust the information conveyed in online customer reviews or not (Urban, Amyx & Lorenzon, 2009). Or is the fear of deception greater? Previous discussion on eWOM characteristics has outlined that a major factor which determines whether eWOM functions most effectively as an information and recommendation source, as well as which attitudes consumers form toward online reviews, is finally the consumers’ general trust in this communication vehicle. Once consumers trust the fellow shoppers’ reviews and recommendations, their willingness to choose the socially- recommended product is enhanced and thus their purchasing behaviour may be meaningfully influenced. This rationale complies with the insights of interdisciplinary research - led by social psychology - that regards the trust concept as a key moderator of interpersonal communication. For instance, Obermiller and Spangenberg (1998) find that trust in advertising is a primary determinant of its influence. The relevance of trust is not only revealed by academic research, but it is also mirrored explicitly and implicitly by non-academic research: in industry research reports, the effectiveness of online consumer reviews and recommendations is often attributed to the consumers’ trust in this type of market communication. For instance, Nielsen (2012) reports that when making purchasing decisions, online shoppers rely on reviews posted by anonymous others (70%) more than they trust traditional media (47%). These figures are very insightful since they imply that what makes one information source more influential than another is the trust of the receiving party. And it goes almost without saying that a person’s reaction to any form of information is ultimately affected by his/her level of trust towards it. For instance, if consumers do not believe that eWOM claims are true, the value of online reviews as an information as well as a recommendation source completely disappears. In other words, shopping ambiguity can only be reduced by OCR when individuals can truly depend on it. Hence, trust is key to eWOM effectiveness - as it is in any form of human communication.

In contrast to the great interest in diverse disciplines, scholars put little effort into systematic research of the trust concept in the eWOM context. When research surfaces, the main research interest seems to be in the investigation of the antecedents and consequences of eWOM communication. Especially the latter area of research has produced a variety of mixed results, which may stem from the defiance of the key role of consumer trust in former research frameworks. The neglect of the role of trust as a key characteristic of computer-mediated communication is quite astonishing, as the concept itself is generally regarded as an important antecedent of behaviours which demonstrate dependence on others (such as the acceptance of others’ advice) by other disciplines (McKnight, Choudhury & Kacmar, 2002a; Smith, Menon & Sivakumar, 2005). Only a few marketing scholars have done pioneering work in the incorporation of the trust concept. Here, some academic studies have attempted to measure trust in eWOM several times (e.g., Briggs, Burford, Angeli & Lynch, 2002; Burgess et al., 2011; Hsiao, Lin, Wang, Lu & Yu, 2010; Liu & Zhang, 2010; Pan & Chiou, 2011; Racherla, Mandviwalla & Connolly, 2012; Sen, 2008; Sen & Lerman, 2007; Smith et al., 2005). And also industry reports are typically interested in adequately assessing the amount of consumer trust in eWOM (e.g., eMarketer, 2008; Nielsen, 2012; PowerReviews, 2010).

However, eWOM trust research - as a young field of inquiry - is still characterized by conceptual confusion. Given the prominence of credibility (a trust-related construct) in research on communications and information systems (IS), researchers have incorporated the concept quite early in the context of peer recommendations and online reviews (e.g., Brown et al., 2007; Lis, 2013; Mackiewicz, 2007; Wathen & Burkell, 2002). Nan (2009) even claims that credibility is one of the most frequently studied triggers of source convincibility. Research contributions agree that the concept is key to online as well as offline persuasion (e.g., Cheung, Luo, Sia & Chen, 2009; Tormala & Petty, 2007). These insights document the important role of trust-related concepts for information gathering. However, literature suggests that credibility and trust are distinct constructs with several divergent conceptual characteristics (Doney & Cannon, 1997; Hovland, Janis & Kelley, 1953; Lewis & Weigert, 1985; Ohanian, 1990). The dictionary defines trust as an assured reliance, confident dependence, and confident anticipation (Merriam-Webster’s New Encyclopedic Dictionary, 1996). The trust literature, which is reviewed in Chapter 2, characterizes trust as a complex construct, often defined differently as “a willingness to behave based on expectation about the behaviour of others” (Luhmann, 1988), “an expectancy that the word, promise, verbal or written statement of another can be relied upon” (Rotter, 1967), or “a willingness to rely on an exchange partner in whom one has confidence” (Moorman, Deshpande & Zaltman, 1993). The same literature also suggests that trust is composed of several elements that are not typically included in the credibility construct, such as confidence in, or a positive expectation of, the trusted party’s benevolence, mutual emotional bonds between the involved parties, as well as a person’s willingness to rely on the trusted party (e.g., Doney & Cannon, 1997; Johnson-George & Swap, 1982). Hence, it would be far from correct to regard credibility and truth as synonyms.

The lack of adequate research on eWOM trust in the face of its latent theoretical, as well as practical, importance calls for a more systematic investigation into the conceptual nature and measurement issue of the construct. These issues as well as the implications of consumer trust in online customer reviews and other forms of market communications are the focus of this thesis.

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