When Heather Whaling needed a logo for her public relations company, she turned to crowdSPRING, an online marketplace that brings together buyers and sellers of creative services such as graphic design, Web design and writing.

"I paid $500 for a logo and stationery package. I know many design agencies that charge at least $5,000 for a logo, so I feel like I received a great deal," says Whaling, president of Geben Communication in Columbus, Ohio. "Plus, instead of receiving just a few designs to choose from, working with crowdSPRING gave me more than a hundred options."

Crowdsourcing, or outsourcing tasks traditionally performed by your staff or a contractor, to a community or crowd of people through an open call, is on the rise. Businesses are harnessing the power of the crowd through marketplaces such as crowdSPRING and 99designs, through social media such as Facebook and Twitter and through interactions with their own customers. Crowdsourcing offers particular benefits for small and mid-sized businesses, which can trim project costs significantly, gain greater insight into public opinion about their products, and streamline offerings to suit consumer demand.

"As a manager for a growing online retail store selling cell phones, I always need to find ways to cut costs for our small business," says Shai Atanelov, manager of Bigtime Wireless, LLC. "In the last six months, we have been able to cut many expenses by outsourcing or crowdsourcing tasks. One simple and free method we use is requesting feedback from customers and visitors to our site, as well as from people we have networked with."

Working with the crowd

Crowd marketplaces offer businesses with limited resources the ability to tap into a rich resource of creativity. For instance, the average crowdSPRING project receives more than 110 responses. The buyer has ample choice, sets a cost that won't go over budget, enjoys ongoing feedback and revision and retains intellectual property rights when the transaction is concluded.

Companies such as crowdSPRING charge a nominal listing fee and a percentage of the project cost, and small businesses are increasingly relying on the professional designers in these marketplaces. More than 11,000 small businesses have posted projects since crowdSPRING launched in May, 2008. Jason Aikens, spokesman for 99designs, says the company has completed more than 50,000 graphic design projects and pays out more than $600,000 to its community of 80,000 designers every 30 days.

When it comes to marketing, many businesses have a free source of information at their disposal. They're turning to their customers and social media for direction. Pyxl, a Knoxville, Tenn., marketing firm, used crowdsourcing to choose its company name through a web site campaign, says Nicole VanScoten of Pyxl. The firm, which was expanding from a traditional advertising agency to a full-service digitial marketing firm, promoted the contest via social media channels.

Participants from every U.S. State, 52 countries and six continents entered the contest, in just two weeks. A Pyxl team narrowed the field to its favorites, then allowed users to vote. The company awarded an Amazon Kindle2 to the winner and another to a randomly selected entrant. "This process showed the rapidly expanding social media market taking hold all over the world and showed the power of a well-organized plan to create an online brand from the ground up," says VanScoten.

Managing the crowd

Crowdsourcing still takes careful management and control on the part of the business, says Craig Kleber, research director at Hall & Partners, a global brand and communications research agency. "Crowdsourcing with some form of channeling and control is a way to capture huge amounts of energy," he says. "Crowds, real or virtual, are powerful things but can quickly become problems if not controlled."

Crowdsourcing experts and clients offer these tips for taking control of your crowdsourced project:

  • Manage task size. Define the scope of the project you're crowdsourcing. "When a task is too large, it's a daunting feat for anyone in the crowd to tackle, and it likely won't get the attention it deserves," says Kyle Hawke, co-founder of Whinot, a crowdsourced business consulting company. "Likewise, a task too small is too easy, which also stifles motivation and limits creativity."
  • Be specific. Explain the parameters of a project, offering insight into your likes and dislikes. Be detailed if you're asking designers to create a new logo or graphic design. Set expectations and standards if you want quality and not just quantity, advises Kleber.
  • Evaluate crowd quality. If your Facebook followers aren't particularly active or engaged, they're not likely to offer helpful input. Asking the general public for help might not generate useful responses, either. "I wouldn't suggest business owners rely on the wisdom of the crowd if they haven't taken the time to build a trustworthy, insightful network," says Whaling.  "The secret to effective crowdsourcing is the quality of the network."
  • Don't manipulate results. While you should stay connected to the project, offering prompt feedback, you lose the value of crowdsourcing if you try to direct  the outcome, Hawke notes. "You used this approach for a reason. Let go! You might actually learn something," he says.
  • Ask what you might be losing. Crowdsourcing is best used for non-strategic tasks, Hawke advises. In the process of developing a project in-house, employees often gain insights and knowledge that can be valuable going forward. You lose that experience if you crowdsource.
  • Treat the crowd with respect. Communicate with participants, and try to avoid exploitation. Expect to pay a fair rate for your project, not much less than you would pay a freelance professional for the work, Hawke says.

If you utilize a crowdsource approach, realize that you remain the ultimate decision-maker, says Kim Lundgren, a managing partner with Hall & Partners. You'll know best "whether or not the idea fits with the brand and its goals," Lundgren says.