Sharing Economy: Changing Marketing

09.01.16
The global sharing economy is changing transportation, housing, and the way we look at products and services. How will that affect marketing efforts?
The global sharing economy is changing transportation, housing, and the way we look at products and services. How will that affect marketing efforts?

I first heard about Airbnb when I was in college studying abroad in Germany. Being in such a central location, naturally I wanted to explore to nearby locales on the weekends. But like all college students, money was a concern. Hotels are expensive and I didn’t want to stay at a hostel alone. Luckily, Airbnb was the solution. That was my introduction to the sharing economy, and I’m never going back.

Airbnb is an online marketplace similar to hotel-booking websites that helps you search for lodging, short-term or long-term, in destinations all over the world. Whether you’re looking for a whole house or apartment, a private room, or even a shared room, Airbnb provides an alternative to the traditional hotel experience. This may sound odd to some, but the idea of home sharing is finding itself in the mainstream. Automobile sharing services like Uber and Lyft have presented taxi services with stiff competition. Even clothing rental is becoming more popular through things like Rent The Runway and Gwynnie Bee.

The sharing economy is not going anyway. According to Forbes, in 2013 the collaborative economy sector had revenues of a staggering $3.5 billion. That same year some economists estimated the collaborative economy could one day be a $110 billion market.

The Sharing Economy is Changing Communication

Now brands need to figure out new, innovative ways to communicate identity in this new way of doing things. First, what is important is to understand the appeal of these services and what kind of demographics are using them.

The services of the sharing economy is particularly attractive because it puts the personality and locality back in traveling. With Airbnb, it’s easy to live like a local, especially when you rent a room in a shared apartment and have the opportunity to interact with your host. When you’re in an Uber or Lyft, it’s easy to learn about your driver, sometimes they even have amenities in their cars like mints, bottled water, or even phone chargers.

In an article for Co.Create, Ana Andjelic perfectly summarizes the draw of collaborative services in the sharing economy when she writes, ‘[The sharing economy] is a combination of value-seeking, convenience, instant gratification, quality control, and looking for a less-mass, more unique experiences.’

Given these fun perks of services utilizing the sharing economy, word-of-mouth advertising becomes king in this economy. Of course this has always been important to marketers, but getting people to rave about your product or service has been somewhat elusive. In the traditional model of marketing, the brand are the common ground between producers and consumers. The brand guides the consumer toward a purchase. In the sharing economy, a consumer decision is highly motivated by reviews and reputation among peers. Harnessing this power can be difficult for marketers.

Brands need to find a way to break away from traditional marketing methods and find a way to help people experience the brand instead of simply hearing about it. In other words, encouraging a two-way conversation between brand and consumer is much more appealing than a brand hosting a one-way lecture via traditional methods. Peers trust peers; this is what the sharing economy has taught us.

Adjusting to the Sharing Economy

Of course, like any major changes in human behavior, there are some hiccups and there is some time needed to adjust. There are still many legal issues facing companies in the sharing economy. Some cities are using a lot of elbow grease to stop owners from putting properties on Airbnb. Officials in many cities and countries around the world have attempted to block Uber as well.

There are things services are trying to do to remain relevant in this sharing economy that just keeps growing and growing. To combat this, hotels and room booking services are vamping up incentive programs in an attempt to bring in more customers. For example, Hotels.com has a rewards program that provides guests with a free one-night stay at a hotel if the program member books and stays ten nights in rooms booked through the website. Some taxi companies are searching for other ways to compete as well.

It’s Here to Stay

Tech startups will continue to create these incredibly valuable services that contribute to the sharing economy. Let’s face it, we are looking at a new way of doing things, and marketers have an opportunity to keep up. The creative industry will find new ways to thrive outside of traditional marketing practices. Those will still have value, but marketers can now be further motivated to find value elsewhere. It’s pretty exciting, don’t you think?