Crowdsourcing: Giving Power and Control to the Public

The crowdsourcing term was first coined in 2006 by Jeff Howe in a Wired magazine article about the ability of companies to take advantage of the talent of the public. Howe later went on to write a book titled “Crowdsourcing: Why the Power of the Crowd is Driving the Future of Business”, where he describes in detail just how this phenomenon is revolutionizing the relationship between companies and their customers. In crowdsourcing, a task is completed, or a problem is solved, by utilizing the group intelligence and diversity of the community rather than the expertise of a select few.

Many industries have realized the value of crowdsourcing. In each case, the use of crowdsourcing has altered the balance of power in significant, game-changing ways. Threadless.com relinquished control of clothing design to the opinion and diversity of the community, creating better product in much shorter timeframes. iStockPhoto financially rewards amateur photographers for stock photos, and simultaneously drove down costs for usage of these photos for the consumer. Innocentive has allowed large companies to financially reward anyone from a college student to a high school teacher for solving unusual problems, increasing opportunities for individuals to demonstrate their problem-solving skills without having to work in a large corporate environment. Open-source software endeavors like Sourceforge, TopCoder, and GNU have given amateur software developers the opportunity to show their skills without working directly for large companies as well. Citizen journalism projects like NowPublic, Cincymoms.com, Wikipedia, and DailyCrowdsource.com have given anyone in the public the opportunity to be published on topics of their own choosing.

More and more companies are also turning to crowdsourcing to meet their marketing and advertising problems. Most of these services are geared toward the creative aspects of marketing (i.e. logo design), but crowdsourcing is also becoming a viable model for actual message distribution. Why pay google or facebook to promote an advertisement if you can tap into a passionate crowd of users to spread the message? Time will tell on whether this form of crowdsourcing will work as well as others have. If it does, it will be incredibly disruptive to the balance of power online just like every other successful crowdsourcing model has proven to be.

Facebook Display Ads - A round peg in a square hole?

Despite the promise of Facebook display ads, the response rates thus far have been abysmal. Recently, analytics firm WebTrends examined 11,000 different Facebook ad campaigns which totaled 4.5 billion impressions . Webtrends found that in 2009 the average click-through rate on Facebook was 0.063 percent. That figure slipped to 0.051 percent in 2010.

Despite the ability to target very specific demographics with contextual advertisements, the results are disappointing to say the least. Advertisers are pouring billions of dollars into social display ads hoping the new medium of social media will yield better return for their interactive advertising dollars.

The problem with social display is that it doesn’t match the medium. Social media has changed the way people interact online, so logic would say it might also change the way people interact with advertisements. Google’s adwords (the sponsored search results on the side of each search query) have been around for nearly a decade and display ads even longer. Taking an old advertising (if ten years is old) approach and trying to fit it into a new medium might make sense on the surface, but is it really surprising that response rates are so low. Or is social display like trying to fit a round peg into a square hole; It doesn’t make cents.