Infomediating a Broken Marketplace

First published October 18, 2007 in Mediapost’s Search Insider

Last week, I explored the disconnect between how advertisers define Nirvana; the ability to control consumer and persuade them at will by inundating them with advertising; and what consumers dream about: authentic and reliable information on needed products and services. There are costs associated with both sides, the cost of advertising, and the cost of consumer research. Max Kalehoff, from Nielsen BuzzMetric, pointed out another cost: the nuisance cost to the consumer of wading through an earlobe-deep sea of irrelevant and uninvited advertising: zapped TV commercials, blaring billboards, glaring signage, email spam, ubiquitous interstitials and pop-ups, preloads… .or one of the zillions of other ways advertisers choose to scream at you.

So, with this highly inefficient, annoying and disconnected marketplace, there has to be a better way, right? Well, Marc Singer and John Hagel III think so. They call it the infomediary, a concept introduced in their 1999 book, “Net Worth.” It’s well worth the read. The one thing that struck me is that in the entire book, the word “Google” is not mentioned once. This is not really surprising, given the publication date, but for reasons that will soon become clear, the irony was not lost on me.

How to Spot an Infomediary

Here’s the basic foundation of the infomediary. Acting on behalf of the client when he’s looking to make a purchase, the infomediary takes previously gathered personal information, as well as information volunteered by the client, and searches for the best match with vendors. The client can choose to remain anonymous, saving himself from an onslaught of advertising. Or, if the client agrees, the infomediary will pass his name along to a qualified vendor, and for this privilege, the vendor will pay the prospect. In essence, the infomediary plays the role of marketing matchmaker.

There are a number of offshoots of this basic premise. The infomediary supplies privacy tools to clients, marketing intelligence to vendors, the opportunity to bargain as a group for lower prices on regular consumable products, and it also acts as an aggregator of consumer power. In effect, the infomediary takes over control of the client relationship, inserting itself squarely between the consumer and the vendor, with the ultimate goal of protecting the consumer. This is a decidedly customer-centric model.

But it’s in the basic concept of gathering information about a client, and using that to ensure a good match with a vendor, that one begins to speculate about Google’s ambitions to fill this role. In essence, at a rudimentary level, Google is already fulfilling some of the role of the infomediary. Certainly if you factor personalization into the equation, we move a big step closer to Singer and Hagel’s concept.

Disruptive Influences

There are a number of dramatically disruptive possibilities in the infomediary model:

  • It forces advertisers to surrender all pretense of control over the consumer. Persuasion becomes a non-issue. The touchpoint with the consumer is stripped of hype, ensuring that product information is authentic and factual.
  • It gives the aggregated consumer voice a level of power never seen before. Previously, the marketplace was vendor-centric: here’s what we offer, here’s how we offer it, here’s what we charge. The consumer’s choice was restricted to “take it or leave it.” Now, the balance shifts to the consumer: here’s what we want, here’s how we want it, here’s what we want to pay. Provide it or we’ll find someone else who can.
  • By gaining control of the customer relationship, it forces companies to focus on two other core processes: one, either product innovation and commercialization; or two, infrastructure management, excelling in producing and distributing a product.

Something’s Rotten in the State of Advertising

There are a number of other seismic shifts in the landscape that come out of the infomediary model, but “Net Worth” weighs in at over 300 pages, and I have a bare 700 to 800 words for this column. The sum of it all is that the infomediary model, or some variation of it, dramatically changes the rules of the marketing game. A terribly inefficient marketplace has evolved in the past century, with some very wobbly power structures. The communication disconnect is almost laughable in its dysfunction. Advertisers spend more and more, hoping to penetrate a barricade set up by increasingly militant consumers. It’s literally a war, with strategies to match. The only hint of concession to the increasing power of the consumer has been search, and that has been done reluctantly. Remember Einstein’s definition of insanity? “Doing the same thing over and over again and expecting different results.”

If you look at the characteristics of an infomediary laid out by Singer and Hagel, Google has many of them in place already, and certainly has the resources to assemble the rest. The one piece that’s missing, and this is the critical one, is a purely customer-centric approach. For all Google’s focus on the user experience, their advertising models are still primarily driven by advertisers, not consumers. But for the model to work, consumers have to have complete trust in the infomediary and be willing to share their personal information. As we’ve seen with the initial pushback to personalization, there’s still a healthy degree of suspicion on the part of users that Google will use personal information for its benefit and not the advertiser’s.

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