Not too long ago, I did something I haven’t done in a long time and wrote a conceptual post, one which dealt with the concept of the “Internet of Things” and where its leading us. In that spirit, and in the hopes of tackling another concept which has been intriguing me of late, I wanted to delve into this thing known as Reputation Marketing, also known as the Trust Economy.
Here too, the concept has been batted around of late, and even addressed in a Ted Talks lecture (see below). And much like the Internet of Things, it addresses a growing trend that is the result of the digital revolution and everything we do online. To break it down succinctly, Reputation Marketing states that as more and more of our activities are quantified online, our behavior will become commodified, and our actions will become the new currency.
At the heart of this trend is such things as social media, online shopping, and online reviews. With everything from used goods, furniture, clothing and cars to accommodations up for review, people are turning to web-based recommendations like never before. In fact, a 2012 study done by Neilsen Media Research suggested that 70% of all consumers trust online reviews, which are now second only to personal recommendations.
For some, this represents a positive development, since it means we are moving away from the depersonalized world of institutional production toward a new economy built on social connections and rewards. One such person is Marina Gorbis, who explores the development of what she calls socialstructing in her book The Nature Of The Future: Dispatches From The Socialstructed World.
In Gorbis’ view, in addition to new opportunities, socialstructing will present new challenges as well. For one, there will be exciting opportunities to create new kinds of social organizations – systems for producing not merely goods but also meaning, purpose, and greater good. But at the same time, there is a possibility that this form of creation will bring new inequities, and new opportunities for abuse.
But at the same time, Gorbis was sure to point out the potential negative consequences. In the same way that one acquires friends on Facebook, or followers on Twitter, people in the near future could be able to hoard social connections for the sake of money, fame, or social standing. Basically, we need to understand the potential disadvantages of socialstructing if we are to minimize the potential pitfalls.
One such development she points to as an example is the rise of social currencies, such as Paypal, Bitcoin, and others. These operate much differently than regular currencies, as they are intended to facilitate social flows that often operate not on market principles but on intrinsic motivations to belong, to be respected, or to gain emotional support. But once these connections and flows begin to be measured, they may acquire a value of their own.
Basically, if we begin to value these currencies, motivations will arise (not necessarily altruistic ones) to acquire them. So instead of turning market transactions into social flows, we might be turning social interactions into market commodities. In the words of sociologist Chase, we would be applying ontic measurements to ontological phenomena. Or as she puts it in her book:
We created social technologies. Our next task is to create social organizations: systems for creating not merely goods but also meaning, purpose, and greater good. Can we imagine a society of “private wealth holders whose main objective is to lead good lives, not to turn their wealth into capital?” asks political economist Robert Skidelsky. Or better yet, might they turn their wealth into a different kind of capital—social, emotional, or spiritual? Our technologies are giving us an unprecedented opportunity to do so.
Another person who sees this as a positive development is Rachel Botsman – consultant, author, former director at the William J. Clinton Foundation, and founder of the Collaborative Lab. In her ongoing series of lectures, consultations, and her book What’s Mine Is Yours: The Rise of Collaborative Consumption, she addresses the transformative power collaboration will have, giving rise to such things as “reputation capital” and the “reputation economy”.
In her 2012 Ted Talks lecture she explained how there’s been an explosion of collaborative consumption in recent years. This has embraced everything from the web-powered sharing of cars, to apartments, and even skills. In short, people are realizing the power of technology to enable the sharing and exchange of assets, skills and spaces in ways and on a scale that was never before possible.
But the real magic behind collaborative consumption, she explained, isn’t in the inventory or the money. It’s in using technology to build trust between strangers, something which is rarely available in the current industrialized, commodities market. Whereas this top-down economic model relies on depersonalized methods like brand name recognition and advertising to encourage consumption, this new model is far more open and democratic.
It is for this reason, and because of the potential it has for empowerment, that Botsman is such an advocate of this emerging trend. In addition to offering opportunities for micro-entrepreneurs , it also provides people with the chance to make human connections and rediscover a “humanness” that has been lost along the way. By engaging in marketplaces that are built on personal relationships, as opposed to “empty transactions”, people are able to reconnect.
The irony in this, as she states, is that this emerging trend is actually taking us back to old market principles which were thought to have been abandoned with modern industrial economy. Much like how Envisioning Technology predicted with their recent infographic, The Future of Money, this decentralizing, distributed trend has more in common with bartering and shopping at the local agora.
Basically, these behaviors – which predate all the rationalization and vertical/horizontal integration that’s been taking place the industrial revolution – are hardwired into us, but are being updated to take place in the “Facebook age”. Through connections enables by internet access and a worldwide network of optic cables, we are able to circumvent the impersonal economic structures of the 20th century and build something that is more akin to our needs.
Or, as Botsman summarized it in her article with Wired UK:
Imagine a world where banks take into account your online reputation alongside traditional credit ratings to determine your loan; where headhunters hire you based on the expertise you’ve demonstrated on online forums such as Quora… where traditional business cards are replaced by profiles of your digital trustworthiness, updated in real-time. Where reputation data becomes the window into how we behave, what motivates us, how our peers view us and ultimately whether we can or can’t be trusted…
Another potential irony is the fact that although online shopping does allow people to avoid face-to-face interactions at their local store, it also draws customers to businesses that they may not have otherwise heard about. What’s more, online reviews of local businesses are becoming a boon to entrepreneurs, expanding on the traditional power of written reviews and word of mouth.
And at the risk of making a shameless plug, this all puts me in mind of a short story I wrote back in April, as part of the April 2013 A to Z Challenge. It was called Repute, and deals with a young executive in charge of hiring new talent, in part based on what I referred to as their Reputation Index Placement (RIP), which was basically a tabulation of their digital presence. Like I said, the concept has been on mind for some time!
And of course, be sure to check out Botsman full lecture below:
Sources: fastcoexist.com, wired.co.uk, ted.com, envisioning.io