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Considerations When Crowdsourcing Your R&D and Marketing

For the last few years, crowdsourcing research and development (“R&D”) and marketing has become the big “in” thing for San Diego and California businesses. A good example is a certain national brand of potato chips that has been running a yearly new-chip-flavor contest. The winner for 2017: Crispy Taco flavored potato chips. See article here. The writer loves the new flavor. As described by the writer:

“Beef. I was not prepared for a potato chip that so accurately recreated the taste of taco seasoned meat. Not just the seasonings themselves, but the meat, a hint of lettuce, a little cheese and tomato and a dash of sour cream…. these chips are actually very tasty.”

It cannot be questioned that the new-flavor contest has been successful as a marketing campaign. Time will tell, of course, whether any of the flavors are a commercial success. If you have been thinking about something similar for your San Diego business, here are several considerations before you embark on a crowdsourcing adventure.

San Diego Crowdsourcing: Do Not Expect to Save Money

Often, businesses think crowdsourcing will save money, but that is not always the case. First, if you use a website — like eYeka — there are costs associated with that use. Second, you will need substantial technical support if you plan to run the crowdsourcing on your own web-platforms. Third, if you succeed, you will need staffing to wade through your responses and engage with the crowd. This is good, of course, since a hefty crowd response is what you want. This will help drive sales, which is the real goal, but do not expect it to be cost-free. The prize money for the Lay’s contest is $1 million.

San Diego Crowdsourcing: Be Prepared for Mockery

When you interact with the internet, you should be prepared for mockery, jokes, jibes, and all sorts of humor (good and bad). The writer of the linked article admits that he has been a jokester with respect to the flavor contest. So, if your corporate culture is one of uninterrupted dignified seriousness, crowdsourcing may not be right for your business.

San Diego Crowdsourcing: Be Prepared to Have Fun and Engage

The point of the foregoing is this idea: Do not take the crowdsourcing too seriously and be prepared to engage. Have the savvy team from your marketing department respond to the jokesters with good humor, and define strategies for channeling the crowd’s interest into sales for your product. What is really being crowdsourced is the means and methods of finding your customers.

San Diego Crowdsourcing: Mind Your Demographics

While crowdsourcing ideas can be used for almost any product or service, no matter how niche or rarified, the usual demographics for crowdsourcing are young and internet-connected people. If that is your customer-base, then crowdsourcing might be ideal.

San Diego Crowdsourcing: It is Not “Real” R&D, it is Marketing

Do not expect to find the next $100 million idea. This is about marketing, driving traffic to your website, gaining brand recognition, getting discussed on blog sites, maybe getting an article in a mainstream media publication, for example. As such, mind the time of year you plan to begin crowdsourcing. If the winter holidays are the time of year for your peak sales, then consider crowdsourcing starting in October so that the online interest coincides with your peak selling season.

San Diego Crowdsourcing: Legal Issues

Before you set up your crowdsourcing, make sure you consult with your trusted, skilled, and experienced business attorney. While, hopefully, your crowdsourcing is fun, engaging, entertaining, and successful in driving sales, before starting, you must make sure your contestants have signed various agreements and releases. Your agreement must have legally enforceable provisions that ensure that your San Diego business:

Owns all concepts, ideas, flavors, designs, etc., if accepted
Is released from all liability
Cannot be sued — rather, any disputes must be arbitrated
Will be able to recover attorneys’ fees and litigation expenses, if sued
And more

San Diego Crowdsourcing: Beware of Website TOS Agreements

Some websites provide services that simplify crowdsourcing. Examples include websites like eYeka. The website’s Terms of Service Agreements (“TOSA”) cover some of the basics, such as providing for the transfer of intellectual property rights to the companies running the contests. But the TOSA’s should be reviewed, in detail, by a good business attorney before use of the websites. Likely, the website will not agree to any changes, but any San Diego business should fully understand the TOSA’s before starting.

Contact San Diego Corporate Law Today

If you want more information on legal issues with respect to crowdsourcing, the needed contracts, and/or review of TOSAs, contact attorney Michael Leonard, Esq., of San Diego Corporate Law. Mr. Leonard provides a full panoply of legal services for San Diego and California businesses. Mr. Leonard has been named a “Rising Star” three years running by SuperLawyers.com and “Best of the Bar” by the San Diego Business Journal. Mr. Leonard can be reached at (858) 483-9200 or via email.