Why Ads Don't Work In A Gift Economy

Online gift economies can easily sound like a load of kool-aid fulled, hippy nonsense.  But in fact, it's how we all operate day-to-day in the real world.  We give and expect to get back - but only at an unspecified future date.  Think regular drinking pals who don't count the rounds too closely because they know it all evens out in the long term.  By buying the beers when you've just been paid you are saving up a few gratis ales for when money is tight.  And we all know what happens to people who don't get their round in.  Eventually, they get thirsty.  The difference is that gift economies used to be restricted to tight social units such as the family, close friends or neighbours.  Now the gift dynamic is writ large across the world.  Networked media has created millions of small groups who are brought together by common interest but remain geographic strangers.  The surprise, however, is that our natural propensity to give-and-take translates into these online cliques and makes them tick.  If you link to the article I have been working on today, I'll be inclined to point at your post tomorrow.  If you add my photos to your montage and give me a name check, I'll recommend your artwork to my friends.  If you add my video to your delicious feed, I'll introduce you to someone helpful.  If you add a little juice to my P2P project, I'll make sure you are invited to that cool new event.  If you praise me, I'll defend you when your name is being dragged through the mud.  Through these small favours, back-pats, gestures, nods and winks, the strands of social networks are drawn together.  Groups unite and alliances form.  There's nothing new here.  It's as old as the hills in fact.  But when magnified through the distributed techno-bobbins that we have in our homes and on our persons, those small gestures and contributions grow into market forces that disrupt whole industries, causing big headaches for MegaCorps.  Think Skype's attack on the telecomms biz, McCool competing with enterprise tech, Fanning's assault on music or BitTorrent's steady disruption of the studios. All powerful market forces that kick-off with a small gift.  So how do brands work in such environments, where people want a favour not a fiver, a thumbs-up not a backhander?  Well, it's fair to say that advertising in its current form won't cut it.  In gift economies advertising is the equivalent of having dinner at your friend's house and leaving £50 on the way out, as the wonderfully hirsuite Yochai Benkler notes in this TED talk. It feels a bit grubby.  Gift economies work because someone is given a voice, made to look smart, introduced to a new friend, when their style is praised, their art is pimped, a door is opened or some light is thrown on a problem.  But just like the real world you have to give before you get and the payback is in the long-term.  Which makes it a difficult corporate investment to justify.  Especially while the short-term option of buying some 'loyalty' through media remains.  However, as the gift economy grows and challenges new markets, brands that can't operate in this forum might find themselves getting thirsty as those beers start to dry up.  Whose round is it again?

Comments

[roger warner]

Nicely put again James.... the point you make about making people feel good and smart (rather than bribed) as part of the exchange is really interesting. I think that's why ads don't work so well here in Blighty as they do in other parts of the world where the bargain is a bit more playful. We're forever on the lookout for the snag, and hate to feel belittled. Whereas smart advertising (gift or otherwise) is done knowlingly on both sides...

[James Cherkoff]

Thanks Roger. Interesting what you say about people feeling belittled by advertising. Anyone else think that's true?

[Rich Benson]

Personally I don't feel belittled by advertising. But I do find most of it quite desperate and lazy.

And I get the feeling that 90% of brands aren't even aware that there are other ways, let alone proficient in their use.

[James Cherkoff]

Mmmmm, belittling, desperate and lazy. Not exactly attractive qualities. So which brands do know how to get the beers in?

[Rich Benson]

The fact that it is so difficult to answer this question says a lot.

And the issues you highlight above were exactly the motivation for our current project. We wanted to provide a b2b service which promotes generosity and imagination rather than advertising budget and "shoutiness" (made up word).

We want to encouraging people to "get the beers in" first, in order to gain the long term benefits outlined in your post James...

[James Cherkoff]

Shoutiness is an excellent word. And good luck with bizual - anything that reduces said shoutiness must be encouraged.

[Rory]

Interesting post. The thing about the gift economy, as you term it, (and free culture in general) is that in the world of the rational consumer, it doesn't work. And unfortunately (or fortunately if you create competitive advantage for a living) most brand owners (certainly in the music industry) are still doggedly following their yellow brick road to the fictional land of the rational consumer.

The gift economy, free culture, experiential marketing and customer engagement are all P2P concepts. These concepts simply don't fit most current brands. Most big brands and legacy agencies are desperately scrabbling around to save themselves with new creative concepts and marcoms strategies. What is needed is a more fundamental look at brand architecture.

[James Cherkoff]

Well put Rory. I suppose the problem is that these 'concepts' like P2P are increasingly the way people actually lead their lives. So big brands and legacy agencies have to come to terms with them - even if it does mean dropping jumping off the yellow brick road. After all, we're not in Kansas anymore...

[mointernational]

I agree with Rich- Most of marketing is lazy and desperate- Look at the Go Compare advert!