Next time you visit a strange city, how will you find a place to stay? If you are of a certain demographic -- a Millennial or a Gen-Xer, perhaps -- chances are you will look for a place on AirBnB, a site on which average people list rooms and homes for rent, often at lower prices than hotels. Another such site, CrashMyPad, advertises "unique accommodations." On these sites and others, people make extra money by renting out overnight accommodations in their own homes.
Can't imagine doing it? Get used to it; it's part of the new "collaborative" or "sharing" economy. Around the world, more people are sharing their homes, cars, time, skills, and knowledge, and new business models such as Zipcar, Lyft, and Neighborgoods are not only inspiring trust between strangers, but also offering new and unique experiences to both buyers and sellers. There's actually a person who calls himself "Hip-Hop Lyft" and offers you a ride filled with old school music and hip-hop trivia.
Millennials as a generation are not enamored of ownership the way their parents were. They only want "access." And if you combine their inclinations with those of people who were hurt by the Great Recession, you will find a large population changing its attitude toward consumption.
So, what does that means for products and advertisers?
For example, most homeowners have a power drill they rarely use. In fact, the average home power drill is used for only six to 20 minutes of its existence. Millennials would rather borrow or rent a tool from a site like Neighborgoods than house their own. This means fewer power drills sold and less money or need to advertiser them. Instead, the power drill will be located on social media or on a social sharing site.
Sharing isn't really new; in fact, it existed well before money. If you needed or wanted something and your neighbor had it, you could lend or trade him something of yours. Soon after that came the middle man or merchant. You traded what you had to the merchant, who then traded it to someone else for something else. In this manner, goods and services circulated more widely. That's why the merchant class came to be known as "tradesmen," and although they were not always accorded the highest order of respect, tradesmen were recognized as a necessity. Internet sites and apps are the new tradesmen.
Alongside trading and money, the brand developed -- mostly as a way of telling one producer's work from another's. Possessions, like animals, were also branded. But the modern day protected brand didn't exist before the Industrial Revolution, when the growth of the factory presented an opportunity for a manufacturer to stamp his brand on a product that was circulated far beyond his little village.
That's when brands became valuable and began to be identified as symbols of trust:
"Around 1900, James Walter Thompson published a house ad explaining trademark advertising. This was an early commercial explanation of what we now know as branding. Companies soon adopted slogans, mascots, and jingles that began to appear on radio and early television. By the 1940s, manufacturers began to recognize the way in which consumers were developing relationships with their brands in a social/psychological/anthropological sense."
We all know the rest. Brands have good will, value, and equity. The Coca-Cola brand is worth far more than the ingredients in the original recipe. But will they survive the sharing economy? If consumers can buy and sell things to each other, where do brands figure into the equation? If the crowd can get everything it needs from each other, where does the company fit?
Indeed, if consumers quit consuming and merely share goods and services with one another, what is the place of brands and advertising?
For the old line, established brands, there are three potential business models.
First, a company can become a service and rent products rather than sell them. To do this, they have to build a durable good that can be passed through many hands instead of many current products, which are built for forced obsolescence. This could lead us to better products.
Like power tools, cars are also underutilized by their owners. Most people drive their car to a location and park it for the day or the night. BMW did its market research and found that it was losing younger customers to services like Zipcar, which allowed customers to rent a car only when necessary.
To counteract this trend and introduce consumers to its product, BMW now rents out cars from its dealership lots. In San Francisco, you can rent a BMW 1-Series electric car, unlock it with an app, and then never drive it again. The brand did this in response to the surplus of cars in most cities. In the future, instead of selling a thousand BMWs, they may sell one BMW a thousand times.
The second model for big brands is the marketplace model, in which companies form a marketplace of used goods, consultants, and recyclers. Companies like Patagonia and eBay have themselves collaborated to encourage people to buy Patagonia products used rather than new. This reinforces their brand as promising durability.
A consumer packaged goods company like P&G could collaborate with services like Cookning and Feastly to develop a marketplace for prepared meals and sponsor it. Feastly matches people who like to cook with people who would like to eat a home-cooked meal and meet some new people, while Cookning sends a chef-prepared meal to your dinner party at home.
Another good example of a brand as marketplace is Tom's Shoes, which recently launched a marketplace where it resells goods from other makers with a similar vision of giving back and sustainability.
And slightly different, but still blending the collaborative economy with a traditional brand, Walgreen's has partnered with the outsourced task management service TaskRabbit to get prescriptions delivered to sick people who can't come in personally to pick them up.
The third potential business model for traditional brands is co-innovation, which involves the crowd in the creation of the product or service. Peer lending, crowd funding, and even bitcoin fall under this model, in which people are empowered to get what they need from each other.
The kind of corporate crowd funding being done by U-Haul is an example of such co-innovation. In this model, the truck becomes an investment vehicle for people who believe in U-Haul, because they can now partially fund a truck and receive a share of the income when that truck is used. This allows U-Haul to diversify its assets away from the total funding of its trucks. Moreover, when you allow your customers to crowd fund your products, you are introducing a relationship of shared destiny, which is much more powerful than just being an occasional U-Haul customer. This is the way for a brand to create evangelists.
So, although on the surface it looks like the sharing economy and a large-scale reduction in consumption would kill brands and hurt advertising, it actually provides new opportunities for the brands that can see beyond their fear. Media companies and software companies have been participating in a collaboration with "the people formerly known as the audience" for a decade already, because of blogging tools and social media. But now, every brand can participate, and this participation can transform the brand from a villain that wastes resources to a good corporate citizen, creating even greater loyalty and engagement.
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