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Kraft Learns About Risks in Crowdsourcing

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“Crowdsourcing” has emerged as a popular trend for companies to have the public come up with everything from ad campaigns to slogans for their brands. There are numerous success stories of companies employing crowdsourcing – most recently Netflix completed an open competition to improve the algorithm for its recommendation system by ten percent. The prize was $1 million and the contest attracted tons of attention from software engineers and the press.

Kraft Foods, seeking a name for an updated version of Vegemite – a food spread popular in Australia – found itself in a less fortunate position. 48,000 potential names were submitted, and Kraft chose “iSnack 2.0,” which was submitted by Australian web developer as a joke. The problem? The name has nothing to do with the brand, and Vegemite fans hate the name, which has lead to the social media backlash and PR challenges which often result from these types of situations.

“The fact that the marketing communication will have to essentially explain the name (rather than the functional benefit), immediately prevents the brand from gaining any true emotional headway with the mass consumer who wasn’t familiar with the initial promotion,” said Richie Cruz, Digital Strategist for AgencyNet in a comment on Advertising Age‘s story.

Incidentally, Jeff Howe, the man who coined the term crowdsourcing, and wrote the book (literally) will be speaking at mediabistro’s upcoming User Generated Conference Expo (UGCX) in a few weeks. We’ll make sure to get his take on this latest crowdsourcing kerfluffle.

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