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The growth of the recommendation economy

Seth Godin wrote about the the attention economy. But it seems to me that we are also seeing the evolution of an online social recommendation economy.

When we all lived in villages there was a strong recommendation economy, and it was fuelled by the fact that everyone knew each other and their reputation. Word of mouth drove choices about which business to patronise and which individuals with whom to socialize. Reputation was everything, and it was protected fiercely on olden days.

With the shift of population to large cities we became disconnected from the hyperlocal reputation economy. But with the digital revolution and the growth of social networking platforms we are seeing a return to the reputation economy for both individuals and businesses.

There is also a growing recommendation economy developing via social media and social networks. This growing recommendation economy is no longer volitional. Instead you are a participant even if you never signed up (refer to my previous post on Klout for some examples).

We are now seeing the growth of explicit social recommendation networks. However, a number of other social networks serve to provide insight into the influence of individuals or brands but these recommendation networks aim to aggregate and rank user’s influence.

Some of the players in this space include:

These networks are all aimed at measuring online influence, and this need is largely driven by marketing needs. As traditional media continues to fragment marketers are seeking to identify those influencers who can help them to connect with audiences.

As Mashable summarised back in 2009, mostly these platforms use metrics to assess influence:

Incoming Traffic – Pageviews, Incoming traffic from search engines, rss subscribers
Incoming Links – Primarily manual links such as blogrolls, in-post deep links
Reader Engagement – Internal searches, time on site
Recommendations – Retweets, share stats
Connections – Number of mutual connections, number of mutual connections on multiple sites
Track Record – Age of domain, number of blog posts, length of engagement
Engagement – How often and long a person has engaged with a service online”

Source: HOW TO Measure Online Influence, Micah Baldwin, 2009

This means that everything we do online is potentially subject to analysis of this nature. And, even if we are participating in ‘private’ social networks, there is the chance that our activity can also be subject to this kind of analysis.

Even if we do not choose to participate in the recommendation economy it is happening, just like it used to happen to everyone in a village.

Along with all of this we are seeing the development of recommendation markets, where people connect and exchange information about the quality of information, connections, work, etc of people or businesses within their networks. Increasingly this kind of recommendation network is driving job search, new business, business connections, and innovation.

This means we need to work out how to benefit from this new environment.


Probably the best advice about managing one’s reputation comes from Maslow via Wayne Dwyer:

“Self-actualized people are independent of the good opinion of others.”

And he goes on cite Dr Seuss:

“Be what you are and say what you feel, because those who will mind don’t matter and those who matter don’t mind.”

From my point of view the only practical response is to keep doing your thing, whatever that might be. To analyse results and take feedback from reliable sources.

But, as I know from experience, if you try to please everyone then everyone ends up unhappy (I’m sure Oscar Wilde said something along those lines too).

Above all we need to accept that we now dwell in a panopticon, and like the villagers of old, we are always under observation in the digital world. This new reality has implications for our comportment online. It means that we need to monitor responses to our activity and adjust our own responses to the current situation.

It also means that even those who do not choose to play in the online arena are playing (whether they like it or not). Reputations are no longer a private matter, instead we live in a digital global village where our reputations are common currency and we rise or fall on the recommendations of others.

This new environment means that we need to remain vigilant, stay connected, and build up social capital to enable us to survive when things do not go well. Just like in a village it is the quality of our relationships that will make life easier.


Some other interesting analyses of this phenomenon include:

3 thoughts on “The growth of the recommendation economy”

  1. Hi Kate,
    Enjoyed your talk last night on this topic.
    Post-event I thought of a question I had for you:
    You spoke a lot about LinkedIn. What, do you think, is an appropriate strategy for accepting invitations on LinkedIn?
    At times I feel like it’s being treated or used as another FaceBook whereby someone you may have met only once (say at a social event) invites you to connect. Or someone that you know outside your professional life, in a completely unrelated field, wants to connect with you. Should I be connecting with them to widen my reach and network, or should I save the connection with them for FaceBook, which I use as a less-professional, more social, medium? How do you think these connections could impact my LinkedIn/professional reputation?

    1. Thank-you, that is a good question. Again it comes down to one’s personal preference.

      Many people on LinkedIn are open networkers (often with ‘LION’ in their bio), and they choose to accept connections from anyone. Others are very careful to keep their connections to small numbers and close connections. It depends on factors such as your personal preferences, your industry or career, your career stage. For example, if you’re at the early stages of a career you might focus on building really broad networks on LinkedIn so as to maximise career options. But people who have already established careers might choose to be more selective about their connections.

      The way I use Facebook is driven by the fact that many of my friends and family are not open networkers and don’t want to be connected to many friends-of-friends through me. I often suggest to people who are not personal connections that we should connect on LinkedIn since we have a ‘professional’ relationship. The Facebook privacy settings are also an important way that I try to protect my ‘friends’.

      My usage of social platforms is pretty much along these lines:

      LinkedIn is for my professional connections (I need to have had some professional contact with them) – it has replaced my Rolodex full of business cards
      Facebook is for people I know well enough to drop by their house
      Twitter is for the people I don’t know yet but who might eventually end up as real-life connections or friends

      But I suspect it is different for other people depending upon their preferences and needs. You might want to consider your strategy in terms of:

      personal preferences
      career stage
      need to keep track of contacts

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