17 Jun 2013

The role of public relations in the collaborative economy

Jeremiah Owyang, principal of Altimeter Group, asked us recently for our opinion about the role of public relations in the collaborative economy, a framework that Altimeter Group is promoting as a significant change in the way companies do business. If you’ve not heard of the collaborative economy, it’s a model that explains how sharing will change business.

The Collaborative Economy

For example, AirBnB disrupts existing hotel chains by allowing consumers to connect with each other for lodging. Uber disrupts the existing taxi economy and Lyft even more so. 3D printing disrupts existing manufacturing processes and companies by allowing consumers to share real world printing patterns with each other. Breather disrupts traditional executive suite businesses by letting people share private working spaces on demand.

In the Altimeter white paper (which I encourage you to peruse), one of the models for businesses to adapt is to lend the name and trust of an existing brand to a collaborative company. For example, if Marriott wanted to pivot, they could offer “Certified Marriott Providers” on AirBnB: homeowners who engage Marriott to inspect their AirBnB room, provide cleaning services, and promote the room on AirBnB for either a fee or a portion of the revenue. Marriott could disengage its brand from just being brick and mortar hotels to being a provider of hotel services to any AirBnB supplier.

In a world where there are a million little businesses, a million entrepreneurs, a million providers of services that traditionally a few companies used to provide, what’s the role of public relations? In a world where consumers are supplying each other and circumventing traditional businesses, is there even a role for public relations? The answer is: of course. The central reason why public relations and marketing communications as a field will never go away is because every business needs three fundamental communications drivers:

Awareness: are consumers aware of the product? Imagine wanting to keep a bed filled on AirBnB. In Boston alone, there were 1,527 open spaces just now.

Boston Neighborhood Guide

That’s 1,527 different “hotels” all competing for fellow consumers’ business. You’ll need to do marketing and PR just to make people aware that your space exists.

Engagement: are consumers engaged with you? Suppose you’re a Lyft driver or an Uber driver. Right now the only feedback mechanism is a star-based rating system. Suppose you wanted to let more people know you were available as a Lyft provider? Perhaps you’d go the extra step of marketing yourself outside of the Lyft app itself, taking reservations. Only with effective marketing and PR could you make something like that work.

Trust: This is the big one in the collaborative economy. With a million businesses vying for your attention, how do you know who to trust? For existing known brands like Marriott, how can you leverage the trust in your name in the collaborative economy? Marketing and PR are instrumental in helping to build credibility and trust in brands, old and new, to help consumers choose to purchase from you rather than one of the many other near-anonymous providers.

Finally, the one area where public relations will be absolutely essential in the collaborative economy is in crisis communications, especially when brands begin to license out their name to independent providers. Franchises already grapple with these thorny PR situations, such as when fast food employees make embarrassing YouTube videos at work. Take that effect and multiply it a million-fold, and public relations crisis communications will become more essential than ever.

Christopher S. Penn
Vice President, Marketing Technology

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3 comments
parkerwills
parkerwills

Ya well even I do believe on building trust and getting the trust from customer does really matters for a business and as well as it encourages over mutual understanding environment!!

jowyang
jowyang

The one other opportunity that begs to be discussed more is the need for advocacy of products that are shared. Products with a higher sharing rate will been seen to have more value among owners and renters.  This means, that customer advocacy of product will matter more than ever.   Thanks for this great writeup Chris, I cross-posted from my blog.

cspenn
cspenn moderator

@jowyang Thanks for the inspiration. I do agree that reputation will be one of the cornerstones of the collaborative economy. The catch will be someone coming up with a reasonably standardized way of measuring that reputation. Does an Uber 5-star driver sync with a Lyft 5-star driver? Does a motel with a 4-diamond rating from AAA compare favorably to an AirBnB top rating?