The Collaborative Economy Movement Changes Business
This report offers critical insight for big brands who are grappling with the emergence of the Collaborative Economy, and for the startups that are driving this growth. For those new to the term, the collaborative economy is a powerful, if nascent, movement in which people are getting the things from each other, it’s a combination of trends like the sharing economy, maker movement, and co-innovation.
[In the growing Collaborative Economy, people fund, make, and share things with each other --rather than buy from inefficient corporations]
That means that people go to a site like LendingClub to get funding for their new project, rather than a traditional bank. Or, they may go to a site like Etsy or Shapeways to get custom made goods, or go to a site like eBay to buy pre-owned goods, instead of buying new products from retailers. In each of these cases, the crowd is self-empowered to get what they need from each other.
But while the collaborative economy is poised to disrupt many industries, there is remarkably little data on how many people participate in sharing and making, who they are, and, most importantly, why they do it. Our report paints a picture of the sharers in the collaborative economy and provides important recommendations for businesses that want to win in this new economy.
The Largest Study of the Collaborative Economy
By engaging 90,112 people the US, Canada and the UK, we uncovered three distinct types of people who participate in the collaborative economy:
Re-sharers: Those who buy and/or sell pre-owned goods online (for example, on Craigslist or eBay), but have not yet ventured into other kinds of sharing.
Neo-sharers: People who use the newer generation of sharing sites and apps, like Etsy, TaskRabbit, Uber, Airbnb and KickStarter.
Non-sharers: People who have yet to engage in the collaborative economy. Although many of these non-sharers intend to try sharing services (in particular, re-sharing sites like eBay) in the next 12 months.
Crowd Companies and Vision Critical Team Up
In Dec, I launched Crowd Companies, an association for large brands that want to partner with the Collaborative Economy, to help these large companies navigate, find partners and shift their business models, hard data is needed to make real decisions. Partnered with Vision Critical, we’ve worked hard to launch a survey across 90,000+ respondents in USA, Canada, and the UK, to find out exactly how they share, buy custom goods, P2P lend, and crowd fund. Crowd Companies council members will receive a private briefing with myself and Alexandra Samuel, my co-author, and we’re hosting an event for council members at SXSW this coming Friday.
This report contains the following:
Introduction and summary
Breakdown of the three groups of sharing customers
Market adoption rates
Taxonomy of the market
Breakdown by demographic: age, location, political party, marriage status and more.
Satisfaction rates of sharing services
Forecast of future behaviors and growth rates by sector
Recommendations for corporations: market opportunities, and specific departmental impacts.
Key graphics There are nine graphics, which we’ll explore in future blog posts, here’s two key frameworks and graphics at industry level.
Above: We’ve segmented part of the collaborative economy (there are still unexplored areas such as co-innovation, 3d printing and crypto-currencies) into five major categories: goods, services, space, transportation, and money sharing. These span the sharing economy and maker movement. In both methods, this enables people to get what they need from each other –rather than buy it from inefficient corporations.
Above: We asked the thousands of respondents about their intended usage over the next 12 months, helping us to forecast behavior usage based on explicit responses. There’s significant growth in the sharing of used goods (up to 46%), but the overall growth rate will slow. Neo-sharing services are on the rise as custom services, personal services, places to stay, crowdfunding and moneylending to achieve double digit adoption rates.
This report is based on two surveys conducted between October 2013 and January 2014 by Vision Critical’s Voice of Market with participants from the U.S., U.K. and Canada ages 18 and over. The initial survey of 90,112 respondents provided data on the overall incidence, frequency and nature of participation in the collaborative economy. The questions regarding the collaborative economy were imbedded in a general omnibus survey covering a variety of topics. The topic of the collaborative economy was not mentioned in the invitation to the survey. A follow-up survey of over 2,500 sharers provided deeper insight into the nature of participation in the collaborative economy and in particular, on respondents’ most recent sharing transactions. The data is demographically representative of the adult (18+) populations of the U.S., U.K. and Canada. The results were weighted by age, gender, region and education, to be representative of the demographics of each nation. The margin of error—which measures sampling variability—is +/- 0.3% for the sample of 90,112 and +/- 2% for the sample of 2,517, 19 times out of 20.
Special thanks to the extended Vision Critical team, including , Andrew Reid, Alexandra Samuel, Andrew Grenville, Jenny Smelyanets, and others.
Right now, customers are sharing media and ideas on social technologies, in the near future, they’ll use similar technologies to share products and services, which will cause a ripple of impacts far more disruptive than what we’ve seen before.
[The Collaborative Economy is an economic model where ownership and access are shared between people, startups, and corporations]
Disruption: Customers are now sharing products and services with each other, like AirBnb (vs hotels), Lyft (vs buying cars), Lendingclub (vs banks), 99 Dresses (instead of buying clothes), odesk (vs traditional hiring methods) as an alternative to traditional sales, in fact, our small list of 200 startups only has a portion of the services that have emerged, enabling this trend.
The executive summary encapsulates what you need to know:
The Next Phase of Social Business Is the Collaborative Economy. Social technologies radically disrupted communications, marketing, and customer care. With these same technologies, customers now buy products once and share them with each other. Beyond business functions, the Collaborative Economy impacts core business models.
Customers Are Sharing Goods and Services — Redefining the Buyer-Seller Relationship. Every car-sharing vehicle reduces car ownership by 9-13 vehicles; a revenue loss of at least $270,000 to an average auto manufacturer. The cascading impact to the ecosystem has far-reaching impacts to auto loans, car insurance, fuel, auto parts, and other services. For corporations, the direct impact is revenue loss that results from customers sharing products and services with each other.
Innovative Companies Are Already Moving Into Collaborative Economy. Some companies have joined this movement. For instance, Toyota rents cars from dealership lots, and Patagonia partnered with eBay to encourage customers to buy and sell its used products. NBC has partnered with Yerdle, a startup founded by former Walmart executives to foster peer-to-peer sharing. This movement impacts every industry.
Adopt the Collaborative Economy Value Chain. Companies risk becoming disintermediated by customers who connect with each other. The Collaborative Economy Value Chain illustrates how companies can rethink their business models by becoming a Company-as-a-Service, Motivating a Marketplace, or Providing a Platform. The forward-looking company
Above: Short Version from LeWeb (matches above video)
Above: Bloomberg TV interview.
Altimeter conducted a number of research interviews, as well tested the thesis with business leaders across multiple spaces. Special thanks to Loic Le Meur who triggered the ‘aha’ for me last year, on how this is the next phase.
Above Graphic: The first phase era of the internet allowed few to publish, yet disseminating knowledge, the second social era empowered everyone to share ideas, and now, the third era, the Collaborative Economy, empowers customers to share goods and services, continuing to shift power to the crowd.Select Coverage of the Report
Interestingly, I’ve been meeting more compliance, legal, and governance professionals in meetings involved in brand side discussions around social business strategies. To understand the needs of this specific role’s goal is to protect the company but enable business to connect to customers Altimeter conduct an Open Research project
My colleagues Analyst Alan Webber and Researcher Jaimy Szymanski interviewed 33 professionals and vendors on the front end of social media risk management and surveyed 92 professionals who said social media risk management was either a significant part or the primary part of their job. The result is our report Guarding The Social Gates: The Imperative For Social Media Risk Management which looks at the newly emerging field of social media risk management.
If you’re a social strategist, (or serve one on agency or vendor side) it’s important you know how to manage risk as you roll out social business programs. Please forward this research report to those who are guarding the gates.
This Open Research report includes:
Interviews with 33 professionals of vendor and risk management, including those from top brands.
Survey of 92 professionals who have a significant part or the primary part of their job in risk management
Nearly a dozen frameworks, graphics, charts, and flow diagrams
To join in an active discussion and presentation, co-author Rebecca Lieb and myself will be hosting a webinar convering the findings from the research, please register for the webinar on Converged Media. Altimeter directly interviewed 34 agencies, brands, technology vendors and industry experts to answer how media are changing. we found:
Summary: Converged Media a Reality –Significant Ecosystem Changes Ahead
Paid, owned, and earned is converging (like social ads) at a rapid pace, we found 11 criteria of success, a handful of case examples, yet companies are hampered internally and with fragmented agencies and technology to make this happen. Converged Media utilizes two or more channels of paid, earned, and owned media. It is characterized by a consistent storyline, look, and feel. We foresee that to achieve cross-channel integration in a consistent way there will be considerable changes inside of the marketing org chart, and a clear strategy on getting agencies to collaborate, and intensive system integration of vendors.
Open Research: Use, Share, and We’ll Create More
Altimeter practices Open Research, we provide our research to you, and encourage you to use with proper licensing as outlined by Creative Commons. Also, we believe in transparency in financial relationships of the companies which we covered in this report, and disclose our relationships if allowed. If you found this report useful, please actively share, which helps us to generate energy to create more.
Overview of needs, market definitions, overview of brands, agencies, and software providers.
Three framework graphics ideal for powerpoint: Converged Media venn, use case workflow, criteria checklist.
Checklist of 11 criteria required for converged media success.
Four real world case studies bringing this concept to life from four leading brands.
Pragmatic recommendations for marketing leaders for internal needs, agency strategy, and vendor deployment.
Vendor showcase of ten technology providers who are seeking to solve this opportunity.
My focus over the past years have been owned corporate content (owned) and social (earned), however my viewpoint on the paid side has been limited. Thankfully, I was able to partner with Altimeter’s Rebecca Lieb who hails from Manhattan and has a strong background in advertising, search, (paid) and corporate content (owned), together with researcher Jessica Groopman and editor Chris Silva, we sought out to answer these questions and bring multiple perspectives together.
At the bottom of this post, I’ll cross-link to all thoughtful conversations, extending the conversation, below the report is embedded directly below:
Above: Today, advertising, corporate content, and social content is often separated, but tomorrow, we expect these circles to converge and overlap, with little or no separation. Hence the term “Converged Media”. We deliberated at great length on how these items would be properly fit into this framework, and
Above: Although we expect many workflows to emerge, this pattern became evident within interviews. In particular, we frequently heard that analysis of social content was often a precursor to content creation by the brand. Furthermore, very few technology providers will be able to solve this entire use case, and brands and agency partners will be relegated to system integration and methods to coalesce.
Above: 11 Success Criteria to Make Converged Media a Reality: We found through interviews a set of patterns from respondents on what will make this a reality and organized the criteria into four distinct categories: Strategy, Organization, Production, Analysis. While this process is likely followed in any individual point channel, now, it must be an integrated approach
Advance your career and learn about the three Disruptive Business Themes companies cannot ignore.
Working among our team of analysts and researchers, Altimeter’s Research group has found three common higher level themes that will disrupt all businesses. Working among our analysts from mobile, content marketing, advertising, analytics, leadership, change management, user experience, and social, we’ve distilled all of the trends we’re seeing and found a common thread among them.
We generated the three research themes with the following in mind: the goal was to ascertain business disruption trends –beyond just technology changes. Each Altimeter analyst provided a unique viewpoint to help create a consolidated view of disruptive trends. All Altimeter analysts will focus on these research themes for 2012 and beyond. All our artifacts (speeches, webinars, reports, blogs, and client interactions) will stem from these themes.
Three Disruptive Business Research Themes
Dynamic Customer Journey: How can inflexible organizations synchronize with the changing customer?
Adaptive Organization: How can an organization adapt and thrive in a real-time world?
Sentient World: What’s smarter: A college grad or your future fridge? (intriguing, yes?)
The recording is below, and you can listen in, and watch the slides in this short 20 minute presentation between myself, Jeremiah Owyang, and partner Alan Webber. We will be announcing a blog ring shortly, encouraging the industry to explore each of the three themes in the coming quarters from your own blog. If you’re interested in learning how to get involved email us at info @altimetergroup.com
If consumers don’t differentiate between “Paid, Owned, and Earned” so why are marketers segmented by different departments and have separate agencies that do each? Does a ‘social media agency of record’ actually slow progress? Can a marketing effort be more effective if all of these methods are used together? These are exactly the questions we want to answer.
Earned (social content) has become mainstream. We’re past the point of experimentation. Nearly every industry requires mass deployment.
Facebook’s recent announcements clearly indicate earned content is now becoming paid, and owned content needs to be paid to achieve mass appeal within an FB page
Inside companies we’re seeing the corporate social strategist cross the aisle to work with direct marketers. Advertising agencies are extending their budgets into the social world. Political and coordination issues will emerge as they come together.
Brands that integrate paid, owned and earned media will benefit because they will reach customers in the most effective manner.
Consumers don’t consciously differentiate between ads, corporate content, and what their friends say, but instead indiscriminately use a variety of content sources.
Want to get involved? Altimeter seeks to interview and take in case study submissions from a variety of brands, agencies, technology providers, and third party topic experts, email briefings at altimetergroup.com. If you want to receive an email copy, sign up for our newsletter or follow the Altimeter Twitter account, and be notified when this report, and others, are published. Also, if you see some notable examples of paid owned earned already happening (the Old Spice Man comes to mind) kindly let us know in comments or send us an email and we’ll take a look. You can see our other Open Research reports on Content Marketing, Mobile Apps, Enterprise Social Networking, Analytics and more on our research report page. We publish them under Open Research creative commons so they can be widely read, adopted, and shared.
Between her Ad and content background in NYC, and my focus on earned/social in Silicon Valley we’ll be the dynamic duo to put these questions to rest.