• by Shankar Gupta , October 6, 2005

Companies that ignore what consumers tell each other online do so at their peril, Howard Rheingold told attendees Wednesday at a conference in New York arranged by Havas media shop MPG USA.

Rheingold, author of the book "Smart Mobs," acknowledged that companies that participate in online consumer discussions about products risk giving up some degree of control--a concession that many brands are wary of making. But, he said, refusal to join in such conversations carries its own risks: "There are companies today that are giants, but won't want to give up control, and will shrink because of it and go out of business," said Rheingold at the conference.

On the other hand, Rheingold said, companies that embrace consumers' desire for interconnectivity and find ways to leverage it will grow. He cited the example of Flickr.com. Flickr, a photo sharing site that allows users to share their photos and search other members' photo collections, was acquired by Yahoo! in March, roughly one year after its startup, for an undisclosed sum--rumors on the Web put the deal's value at anywhere from $10 to $40 million.

He added that participating in a conversation with consumers doesn't mean manipulating or directing the discussion. "It's not something you can put a stamp on and send out--you just have to listen," he said. "Covert manipulation in a world where millions of people can research something and publish what they find on their blogs is a recipe for disaster."