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9.2 How It Works

Learning Objectives

  1. Understand the different types of crowdsourcing.
  2. Understand the different ways in which crowdsourcing is used.
  3. Learn the different platforms that exist online.
  4. Understand the importance of the community.

There are four types of crowdsourcing:Josh Catone, “Crowdsourcing: A Million Heads Is Better Than One,” ReadWriteWeb, March 22, 2007 _million_heads.php (accessed May 11, 2010).

  1. Invention. CrowdsourcingTaking a job traditionally performed by a professional and distributing it to an undefined, generally large group of people in the form of an open call. is used to source ideas, often for new or existing product development. The crowdA large undefined group of people made up of many online individuals. also helps by improving on and ranking ideas. Examples of invention include Dell’s Idea Storm and My Starbucks Idea. On My Starbucks Idea, the communityA social network of individuals who interact through a specific medium. is asked to share, vote for, and discuss ideas to improve Starbucks’ products and service.
  2. Creation. New content is created, owned, and maintained by the creators. The crowd can contribute finished work or just an idea. Good examples of this include Threadless, Wikipedia, and Idea Bounty. Idea Bounty, for instance, works on a system through which a client will post a briefA document giving essential information concerning the problem that needs solving. that is then distributed among the community. The community then responds to the brief with creative solutions. The best solution to the problem posed is chosen and its creator rewarded.
  3. Organization. Here crowdsourcing is used to create new content by organizing existing content. Examples here include Digg and StumbleUpon. StumbleUpon is an online community where users discover and rate Web pages, Web sites, images, and video content. It acts as a personalized recommendation engine using peer voting and social-networking principles.
  4. Prediction. Prediction aims to predict trends by asking the community to submit ideas and vote for them. Here, examples include Yahoo! Buzz, Ramussen Markets, and Media Predict. On Media Predict, users bet on media trends such as television viewership and books that are likely to sell well. Media Predict can generate predictions as to what will and what won’t succeed. Essentially it helps media companies understand what people really want.

In the commercial context, there are three dominant ways in which crowdsourcing is used:

  1. Product development. The crowd’s knowledge is used to improve an existing product or suggest new products. The consumer interaction and buzz also provide a valuable branding effect. Examples include Dell’s Idea Storm and GM’s (General Motors) Fast Lane blog.
  2. Initiatives and new business. In this case, crowdsourcing is used to generate business ideas or product concepts and often funding as well. Crowdsourcing can also connect those who have business ideas with those who can provide the funding to get them off the ground. Examples include a competition held by LG in June 2009 where it crowdsourced the design for its next mobile phone and “The Sling Back,” a universal wire retractor that holds any type of cord, which was designed by the community from the crowdsourcing platform, who also designed the Cordie that we mentioned earlier.
  3. Communications ideas. This exists primarily within the advertising and marketing industry. It involves the crowdsourcing of ideas for the communication of a brand message, advertising message, or value proposition. For example, you could crowdsource the design of logos, televisions advertisement scripts, or new marketing concepts in any shape or form. Some examples include Doritos’ crowdsourcing of its Super Bowl television advertisement since 2007.

Furthermore, crowdsourcing platforms come in two flavors. Generally, these platforms exist online:

  1. Centrally controlled. Where the process is centrally controlled, a guiding force channels and formalizes the process. Idea Bounty is an example of this: a specialist team helps define the challenge and the brief, and the client chooses the winning idea rather than a community voting for the best idea.
  2. Community controlled. This works the opposite way. Here the community controls the outcome. Threadless is an example of this: users vote for their favorite t-shirt designs, and the top-rated designs are printed onto t-shirts for sale.

The Importance of the Community

A strong community is the key to successful crowdsourcing. The community can be viewed as a crowdsourcing platform’s most important asset—it is essentially an economically productive unit. Without it, a crowdsourcing project would be impossible to run. The creative product produced by the community is in fact what the crowdsourcing platform sells. So without creators there is no product to sell. Keeping a community interested, engaged, and rewarded is essential in retaining that community.

Unfortunately, the importance of a community, how it works, and what keeps it motivated can be often overlooked. A good example of this is a crowdsourcing platform called Cambrian House. The platform was set up as a place where the community could post new business or product ideas. The aim was to get the community to help refine, build, and test these product ideas and then the original owner of the idea could sell it. With the snappy catchphrase “You think it; Crowds test it; Crowds build it; You sell it,” Cambrian looked set for success.

Initially Cambrian House was flooded with new product ideas. However, soon it became clear that the crowd was great when it can to coming up with ideas and refining them, but when it came to building or executing them, the crowd lost interest. It was either too time consuming or too difficult to build or execute the ideas produced by the community, and the reward was not a fair trade-off for the amount of work required. The result: the site never made any money and eventually closed down. The founders of Cambrian House have gone on to found another crowdsourcing platform, Chaordix (

Motivations to Participate

Communities using crowdsourcing platforms exist for different reasons. Communities like Dell’s Idea Storm and My Starbucks Idea exist because there are lots of people who have a large interest and affinity to those brands. They participate in the community because they want to influence the products and services they receive.

Idea Bounty keeps the community interested and engaged by offering the chance to tackle problems and brands that the community might not otherwise be exposed to. Individuals are rewarded for their contributions with awards for outstanding ideas, and the owner of the best solution receives a monetary prize. These are all elements that keep Idea Bounty’s creatives actively involved and motivated.

Idea Bounty, like iStockphoto, offers keen hobbyists a platform to meaningfully contribute to a cause and, importantly, be rewarded for their contributions.

In the case of Idea Bounty, it is also very clearly stated that creatives own their ideas, and legally their work is protected as their own. This ensures that creatives feel in control and unexploited. Their ideas remain highly confidential—creating a safe zone to submit ideas and explore their creativity.

For businesses and brands, there are many reasons to get involved with crowdsourcing. Foremost is the ability to tap into a diverse crowd and source varied solutions to their problems. Businesses and brands simultaneously access huge amounts of customer and consumer insight, at lower costs. With sites like Idea Bounty, brands only pay for what they use, making crowdsourcing the most effective way of sourcing solutions and ideas out there.

Key Takeaways

  • There are four types of crowdsourcing:

    • Invention
    • Creation
    • Organization
    • Prediction
  • There are three ways in which crowdsourcing is used:

    • Product development
    • Initiatives and new business
    • Communications ideas
  • Crowdsourcing platforms come in two flavors:

    • Centrally controlled
    • Community controlled
  • The community is an essential part of crowdsourcing. It is important to keep it engaged and interested.
  • The importance of a community, how it works, and what keeps it motivated can’t be overlooked.
  • Users participate in communities for various reasons, such as wanting to influence the products and services they receive.


  1. What is the definition of crowdsourcing?
  2. Find some examples of online crowdsourcing platforms not mentioned in the chapter. How can you tell whether or not they are successful?