The advent of the Kindle Fire will impact every business engaged in advertising, from your local weekly newspaper to Google, Yahoo, Microsoft, AOL, and Groupon, because it will vastly accelerate the transformation to direct-to-consumer marketing by merchants, manufacturers, and service providers, without the traditional interpolation of advertisements to drive buyers to sellers.
It's a good piece, worth reading.
But there's a logic to commercial information in this Media Interregnum that I need to keep emphasizing, because it's as true now as it was when I began beating this drum six years ago.
- Advertising (renting the attention of consumers to sellers) puts publishers in the business of representing the interest of the seller;
- As consumer attention fragments and advertising becomes ubiquitous, basic market principles will continue to drive down the ad rates that publishers receive;
- Commercial media saturation creates a new problem for buyers.They need help cutting through the low-value sales-pitch clutter to find products (CNET) and services (Angie's List) that actually suit their individual needs;
- Businesses that recognize this opportunity move from representing the interests of the seller (help me sell the thing I want to sell) to representing the interests of the buyer (help me select the right thing for me).
- By adding the option of moving directly from research to purchasing ("My Shopping Cart"), businesses generate revenue by adding value for the user (comparing products in useful ways), the seller (providing quality commercial information about the seller's product) and both buyer and seller (by handling the transaction). The result is a virtual marketplace in which a share of every transaction belongs to the business that brings buyer and seller together;.
- Internet-era businesses following this logic have created successful digital marketplaces for products that are the same no matter where you buy them (Amazon), products that can be hard to find in your town (HuckNroll), discounted products (O.co), and products that can be shipped cheaply and returned easily (Zappos);
- The challenge for publishers who serve specific physical communities (news of interest only to this town or that one) is to organize efficient, tailored virtual marketplaces for brick-and-mortar businesses in those communities. These transactions are often more complex than buying books online, but they are also more valuable because they are more complex;
- To capture that value, local publishers must shift from publishing and structuring information solely on behalf of sellers and put the user at the center of their business model. Only then can they create marketplaces in which they receive a cut of every transaction;
- Doing this will not only create a more profitable business model, it will improve the trust that individual users give to the non-commercial information a publisher provides;
- And, finally, by doing this, they will begin to reap higher advertising rates. Because if you're a car dealer, whose attention do you really want to rent? The person who just wants to watch a ball game, or the person who is -- today, right now -- actively looking to buy a car?
Obviously, this logic requires quality software. It requires research. It requires studying local retail businesses and buying patterns to understand what information adds the most value to transactions.I'll need a different approach for scheduling auto repair than I will for buying school supplies or selecting a backyard grill.
Now, after saying all of that, have you noticed the shortcoming in Martin's prediction yet?
By focusing on "direct-to-consumer" marketing by individual businesses, he's essentially betting on the emergence of thousands of individual, disconnected, single-business marketplaces "(merchants, manufacturers, and service providers").
Consumers don't want one set of choices. We want the best set of choices.
Also, what he describes is expensive. The stuff he writes about how tablets as a gadget-class change the psychology of online shopping is all valuable, but if you're imagining a world in which every bike shop in every mid-sized town has to pay some third-party vendor to provide a direct-to-consumer marketing app, -- plus the cost of delivering that app to potential consumers -- well, I'd like to know what color the sky is there.
On the other hand, if you can figure out a way to provide that service for free for all the bike shops in your market, connecting all the retail sellers and all the consumers in your community, you've got a business with a future. That's what I've been betting on since 2005.