Defination

Official Definition The act of a company or institution taking a function once performed by employees and outsourcing it to an undefined (and generally large) network of people in the form of an open call - Jeff Howe Is the act of sourcing tasks traditionally performed by specific individuals to a group of people or community (crowd) through an open call.

Meaning
CROWDSOURCING is the solution for enterprises that are seeking to collaborate in-network leveraging their customers, employees, partners or constituents to generate ideas that lead to value and drive success. With Crowdsourcing, you can sharpen your focus on those big ideas that show the most promise of successideas that advance your company or organization through: Improved product or service offerings Strengthened competitiveness Better allocation of resources Greater productivity Increased customer retention and loyalty

 Crowdsourcing is a newly developed term which refers to the process of outsourcing of activities to an online community or crowd in the form of an open call. Any member of the crowd can then complete an assigned task and be paid for their efforts.

Example
Chiquita banana brand asking consumers to submit design ideas for the stickers on its bananas. Another example of crowdsourcing is Mountain Dews DEWmocracy campaign, which put consumers in charge of creating new beverage flavors, naming them, and developing packaging and ads to market them.

 Both of these ideas were immensely popular with more than 100,000 people submitting and voting on the preferred designs. So crowdsourcings point is if you get enough Terrys to submit designs, youre sure to find at least a handful of good ones.

Origin
The term Crowdsourcing was introduced by Jeff Howe and Mark Robinson in a Wired Magazine article in June 2006. It describes a process of organising labour, where firms parcel out work to some form of (normally online) community, offering payment for anyone within the crowd who completes the task the firm has set. The advantages for a firm of outsourcing to a crowd rather than performing operations in-house is that firms can gain access to a very large community of potential workers who have a diverse range of skills and expertise and who are willing and able to complete activities within a short time-frame and often at a much reduced cost as compared to performing the task in-house

Importance
Product Development
A common marketing task for which crowdsourcing is being applied in these early days of the medium is for purposes of product development and design. Firms use crowdsourcing to get input and advice on their own product development efforts from existing end-users, and experts who may be able to solve a certain scientific or design problem.

Advertising and Promotion

The second generalized marketing area where crowdsourcing has been utilized to date, is fort asks related to advertising and promotion. In this area it is possible to distinguish two distinct forms of crowdsourcing activities, one is the use of crowdsourcers for rather laborious, menial tasks which the hiring firm has neither the time nor manpower to complete themselves, the second form is again the use of experts who are used by some firms to help create and develop advertising and promotional campaigns.

 1. Reduces Marketing Costs rather than spending thousands (or more) on marketing to the masses, and hoping you have the right message, you can have the consumer / client/ customer give you feedback on what they like BEFORE you launch the marketing campaign. 2. Eliminates Need for Test Groups what better test group than the actual target audience? Engaging the audience in your marketing efforts and plan can help to eliminate the need for costly (and often biased) test groups. 3. Real Answers for Little to No Cost from your Targeted Audience your target audience is who you are truly trying to reach so why not ask them for their input in what they like about your product or service and then USE that valuable information to make your marketing that much more effective.

 1. Be Very Clear in Your Brief Whether youre doing behind-the-scenes crowdsourcing or asking consumers to pick the next flavor of your soft drink, you need to be very specific about what youre asking them to do. Setting clear guidelines in a brief will also help you avoid a disastrous situation in which consumers are trashing your brand. Example - Thats what happened when Chevy ran a crowdsourced program in 2006 asking consumers to make videos for its Tahoe SUV. Consumers seized the chance to criticize the vehicle for its environmental unfriendliness with lines like Its Global Warming Time.

2. Offer Good Incentives

When it comes to crowdsourcing, cash is king. If you want high production values, you have to open up your wallet a bit. Dont dangle a trip as a prize since consumers may not be able to take it for one reason or another.

3. Dont Overwhelm the Consumer

 4. Prepare to be Overwhelmed by Ideas The difficulty in crowdsourcing a campaign often is not getting the ideas, but keeping track of them all. You get a huge chunk of ideas and Best ones needed to be sorted out.

5. Remember: Crowdsourcing Doesnt Equal Unprofessional

,Professional is a term that has been sorely tested in recent years, thanks to crowdsourcing. There are industries, like medicine and engineering, where it would be unthinkable to have a stranger come in off the street and do the job youve been working at for 20 years better than you, but advertising isnt one of them.

Advantages

Cost-effectiveness - Comparatively speaking, crowdsourced research can be done at a fraction of the cost of traditional research. Quick Turn Around - The time it takes to gather, execute, and analyze is shorter thanks to a purely digital foundation. Flexibility - As trends emerge in findings, researchers can easily adjust their strategy to catch any shifts or surprises. Collaboration - Crowdsourced research allows brands to collaborate easily with customers to ideate or improve upon products, to test concepts, ads, and experiences, and to continue the conversation over a longer term. Velocity - Crowdsourced research can travel at the speed of digital, allowing for real-time consumer behavior analysis and insight for new technologies, memes, trends, and conversations. Marketing and Marketing Research - Even though its frowned upon and often times refuted in traditional research, the nature of crowdsourced research implies there will be some form of marketing intertwined as consumers share their stories, insights, and ideas for brands they support.

Disadvantage

Crowdsourcing the wrong thing We discussed that R&D is also getting crowdsourced but in case if you have an idea or a task to be done, there is an assumption that it will not be leaked. Make sure whatever information you provide while you crowdsource even if gets leaked you dont lose anything. Whose stuff is it anyway A major issue that I see with Crowdsourcing is that of copy rights. If Nokia claims that the artwork that LG has used by crowsourcing is a Nokia copyright, then what? Its true that LG need not pay the royalties but would have to at least withdraw that phone off the market. What if while the crowdsourcee participates in the contest he also provides the same design to Nokia and before LG comes up, Nokia throws a similar piece in the market. The genuineness of the crowdsourcee needs to be checked. Wrong Marketing At times Crowdsourcing can result in wrong marketing by passing the bad word of mouth publicity. Take for examples an automobile company tries to crowdsource its next model design. In case if the end product is proved not good from the comfort aspect and not good in aesthetics, who is to be blamed? People will simply say that the company no where takes quality seriously and rather tries to crowdsource to get the work done in pennies. At times you have to give that buck For saving the crowd from crowdsourcing providers who are just trying to fool certain websites mandate you to guarantee you at least 25 options to choose from but once you get you have to chose from those 25 and pay the price. Now not necessarily you get that eye catching website you dreamt of but still you have already escrowed the money and hence you would have to live with it. Ideas are open To impress you there would be people who will show you a glimpse of what they can offer, this can be risky because if you wanted a completely unique product, there are chances others too had an eye on it. And you paid for it where as others just picked it from your order page free. You get it cheap but it cant be costlier Thats an irony. Take for example to get your job done you can outsource, and by paying more you can get better results (mostly). While in crowdsourcing this might not always be true. There are various individuals satisfying your need; some might be OK with a 100 dollar bill while others try to get at least 250. The prices are random and by increasing them, you not necessarily increase the quality of work, so to say.

Size of Market
Crowdsourcing is fundamentally changing business, government, non-profits, education, research, and other sectors. Remarkably, were just seeing the tip of the iceberg. Thus there is huge potential for crowdsourcing. U.S., Canada, Greenland, India and many other countries leverage crowdsourcing to solve public and complex private industry problems. To see more government projects (http://www.challenge.gov is a recent good example)

Growth Rate
Crowdsourcing businesses will evolve their business models to provide more sophisticated crowdsourced services. There are already many innovative crowdsourcing business models an we will continue to see innovation in the space. . Consumers like being heard from regarding feedback on products they use. There is something about claiming ownership in a process or product development. So down the road when you see a product or concept that you were asked to provide feedback about, you can say I helped invent that or I helped launch that. Crowdsourcing capitalizes on that aspiration.

Problems
1. While the promised prize of naming a new product will certainly guarantee large numbers of entries what happens if there arent any good/acceptable/greatideas amongst the pile? Your brand has no control over the quality of entries. Your company becomes blinded by the success of the buzz and attention the competition has generated what if they choose the wrong winner? Over 40,000 entries and the best they could choose was iSnack 2.0? Condorcets jury theorem a political science theorem which states that if a crowd is slightly more likely to be wrong about a subject the bigger the crowd the more likely you are to get the wrong answer (iSnack 2.0 anyone?) The public arent professionals or experts in branding/advertising/marketing, and while thinking outside the box can result in some innovative ideas, how can you ensure that they will choose a good one? OzSoapBox explains the danger ofallowing another IT nerd to name anything ever again. This process still requires the guiding hand of an expert in the subject, and cannot be expected to be fool proof exercise.

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Examples of crowdsourcing
Pepsi launched a marketing campaign in early 2007 which allowed consumers to design the look of a Pepsi can. The winners would receive a $10,000 prize, and their artwork would be featured on 500 million Pepsi cans around the UK. Facebook has used crowdsourcing since 2008 to create different language versions of its site. The company claims this method offers the advantage of providing site versions that are more compatible with local culture.