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In 2009, Kraft Foods wanted a catchy name for its new version of Vegemite, a yeast-based spread popular in Australia. Instead of hiring a branding agency, the company decided to crowdsource the task. Kraft asked people in Australia to submit and vote on potential names for the new product. After 48,000 entrants made suggestions, the winning name was “iSnack2.0.” When the company announced it, bloggers and fans ridiculed it and the company retracted it a few days later. Not only was the name scorned, but it had also been trademarked previously.

The iSnack2.0 incident illustrates the perils for businesses that try to take advantage of the supposed wisdom of the crowd. It’s no mystery why the idea appeals: instead of hiring one person for a task, a business can pay little or nothing to divide it up among thousands, often getting the work done faster to boot. But while companies have had some success divvying up simple jobs like categorizing products, harnessing the crowd for more complicated tasks has proved difficult. Even as crowdsourcing became a buzzword, it became apparent that getting useful input from a faceless mob in an unstructured online environment was harder than it seemed.

Now, third-party companies have sprung up to act as liaisons between businesses and diffuse groups of potential contributors. These companies say they can attract specialized crowds to help solve a wide variety of problems in such diverse industries as chemicals, design, and the Web. “It turns out that when you have tasks that require creativity and planning at a higher level, the overhead involved and the need for consistency across the whole task makes [crowdsourcing] very difficult,” says Judd Antin, a research scientist at Yahoo who studies online collaboration. “We’re at the beginning of understanding how to take advantage of the efforts of many of thousands of people.”

To start off, one needs the right crowd. That’s apparent from the company Threadless, often cited as a successful example of crowdsourcing. Threadless, which sells T-shirts online, asks people to submit ideas and vote on designs that they like and would buy. The Threadless staff assesses each shirt for ranking, comments, and “social score” (the number of tweets about a design, or the number of times people logged in to Facebook have clicked that they “like” the item) and picks a final design to print. The power of Threadless lies in its crowd: 1.5 million voting members have submitted over 300,000 T-shirt designs.

But few companies have such an engaged community or time to build one. That’s where crowdsourcing companies like CrowdSpring, CrowdFlower, Victors & Spoils, NineSigma, and InnoCentive come in: they offer crowds for specific tasks.

Trada, founded two and a half years ago, straddles the line between traditional outsourcing and crowdsourcing: it takes on a company’s project and farms it out to a widespread pool of people. In particular, Trada gets these people to help companies create and improve ad campaigns on search engines like Google, Yahoo, and Bing. A tourism company, for example, would bid on keyword combinations (like “Hawaii vacation” or “Europe tour”) and write short text for an ad. When a Web surfer types in that keyword, the company’s ad comes up alongside the search results, and if the ad is clicked on, the company pays the search engine the amount it bid. The ways of improving an ad campaign are numerous; companies can switch or combine keywords or make them show up only at certain times of day, for instance. But comparing results and making the changes can be laborious. Those are the tasks that Trada turns over to a crowd of workers. If a business aims to spend $1 a click and a Trada worker creates a successful campaign for 80 cents a click, Trada and the workers keep the difference. Trada’s customers include Warner Bros. Music and the New England Patriots.

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Credit: Trada

Tagged: Business

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