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Crowdsourcing in the digital age

9/30/2013

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The term crowdsourcing, first introduced in Howe and Robinson’s 2006 Wired Magazine article, is a relatively new term that refers to the process of outsourcing the activities of a firm to an online community or crowd in the form of an “open call.” More specifically, Howe said that “crowdsourcing is the process by which the power of the many can be leveraged to accomplish feats that were once the province of a specialized few.” Though crowdsourcing has existed in some form for a long time, it is only recently with the tools & technologies available to 21st Century marketers that we've seen a surge in crowdsourcing campaigns.

I'd like to walk through three different forms of crowdsourcing, along with examples of how each are being used in the marketplace. The three forms are: Crowdfunding, Crowd Marketing, and Crowdsourced New Product Development.
#1 - Crowdfunding

Crowdfunding is the practice of funding a project or venture by raising many small amounts of money from a large number of people, typically via the Internet. An example of crowdfunding is the Kickstarter platform. So, how does it work?
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Kickstarter is a funding platform for creative projects. Every project creator sets their project's funding goal and deadline. If people like the project, they can pledge money to make it happen. If the project succeeds in reaching its funding goal, all backers' credit cards are charged when time expires. If the project falls short, no one is charged. Funding on Kickstarter is all-or-nothing.
- Kickstarter Website
More examples of crowdfunding include Sellaband,
FundaGeek, Rock The Post, and Razoo. The beauty of crowdfunding is that you can use it not only to come up with the funds needed to execute, but you can also leverage it as a market research tool in the sense that it tests whether or not there is sufficient demand for the product. By using the digital tools available today, companies are able to efficiently determine what products to move forward with. Furthermore, crowdsourcing is enabling the startup community to thrive in a way that wasn't possible before the age of the internet. Instead of hoping that an investor in their vicinity is interested enough to invest, they can spread their idea across the world and capture micro-investments from consumers that weren't accessible before the digital age.
#2 - Crowdmarketing

Crowdmarketing is the development of marketing materials through the use of a crowd (typically a community of fans).  In consumer behaviour terms, this can be seen as an example of co-creation of content.

An example of a crowdmarketing platform is Logo Tournament, which allows businesses to create a logo contest and present it to a pre-established community of designers.
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An example of a crowdmarketing advertisement was a Ford Focus ST advertisement that put out a call to have consumers film the commercial themselves and send in their footage via the internet. The footage was later assembled to created the first-ever crowdsourced commercial. Unfortunately, the video can no longer be accessed on youtube at this time, but it was a great example of how a brand amplified consumer's positive view towards the brand and engaged with them in a way that made them feel respected by and important to the brand.
#3 - Crowdsourced New Product Development

Crowdsourced new product developed is the process of using a crowd to develop and/or select which new products should be launched. Threadless is often touted as the first company to fully implement a crowdsourced approach to their new product development. How does it work?
“The Internet-based company asks consumers to submit shirt designs they've created--it gets as many as 300 submissions a day--and allows its large fan base to vote on the ones they like best. It pays winners, more than 300 each year, $2,000 for their creations. The company picks the best of the most popular T-shirt designs, screens them for copyright violations and obscenities, and sells them on its site within three to eight weeks for $18. It aims to release seven new designs a week.”  
- Forbes Article
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More examples of crowdsourced new product development include Quirky, as well as Waitrose's crowdsourcing initiative that led to the development of its Seriously Chocolatey Rose-Infused Chocolate Ganache.

The great thing about crowd-sourced new product development is that you gain free R&D that is on the cutting edge of consumer insight because it is coming directly from your consumer.
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