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Disintermediation: Part 2

by Matt Manning

In Part 1 of this post I discussed the possibility of content aggregators becoming less viable as the corporate and government owners of large valuable datasets start making their data available directly, free-of-charge, and/or via new cooperative aggregation models. In Part 2 I look at the rise of corporate content.

For over 70 years—certainly since the launch of Norman Cahners‘ Modern Materials Handling—the business-to-business magazine has reigned supreme as the place where buyers and sellers in very specific market segments “meet” and interact. Readers come for the articles’ insight into their industry and their competitors, while advertisers hawk their wares to an audience of qualified buyers. Over the last several years, however, the sellers have moved to create content themselves and to establish a direct connection to their prospective buyers.

This disintermediation was initially contemplated when the ROI on magazine advertising drifted lower and budget money moved into direct marketing. It accelerated with the rise of the pay-for-performance ad delivery model. Even “advertorials” (ads that are formatted to look like a magazine or web site’s editorial content) couldn’t answer the looming question for B2B advertisers: Why should we pay to run an ad in a publication that goes to a random subset of our customer base when we can reach out directly to the exact prospects we want to reach?

A direct relationship with existing customers is a relatively established channel of communication (think of corporate newsletters to clients and customer-focused annual events), but a direct relationship with prospective customers, or a “CRM-centered” approach, means content tailored to emphasize the positive aspects of a product also needs to include valuable, objective information as well.

That’s where corporations stumble with their “content marketing” efforts. They can produce corporate blogs, whitepapers, webinars, and newsletters and they can distribute them through web sites, email, and third-party partners, but most struggle with creating compelling unbiased content.

They don’t need to act exactly like a B2B magazine, but if they copy the publishing business’s general strategy (providing a mix of short pieces, long pieces, long-form analyses, data visualizations, etc.) and add some things that publishers can’t, then there’s every reason to believe that B2B content marketers can effectively attract industry eyeballs:

  • Interviews and reports with in-house experts
  • Respected consultants as guest bloggers
  • Webinars where questions can be asked
  • Proprietary research with wide appeal
  • Market analyses supported by open data
  • Data visualizations of market trends

According to Blue Nile Research, 46% of content should be data and statistics, there should be as much video content as blog content, and customer case studies need to be part of the mix. Usable, shareable content is key, I think, for two reasons: content needs to include practical information that can be put to immediate use and social virality is as important as SEO.

If corporate media can produce this range of content and provide enough hard-to-find information on industry challenges and developments, they should be able to both bring value to readers in the industry and influence their current and prospective customers. Content marketers will, of course, face the same SEO, editorial, and design challenges that traditional publishers face in building an audience for their output but there’s no reason to believe they cannot accomplish this.

One final note: “Pure” B2B journalism has always been a bit of a myth since B2B journalists couldn’t ever afford to offend advertisers (who are also valuable event sponsors and speakers) with unvarnished editorial. So, in an odd way, because corporate content isn’t neutral by definition, it allows readers to more clearly understand the authors’ perspectives and motivations. This trend toward embracing an author’s “known bias” is a larger one in the media as a whole (e.g., the recent Boston Herald’s recent front page editorial) and it provides a kind of philosophical underpinning to the ongoing disintermediation of B2B media.

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posted by Shyamali Ghosh on April 21, 2016

Disintermediation: Part 1

by Matt Manning

When the Worldwide Web was born in the 1990s, there was a lot of talk about disintermediation. The removal of layers of intermediaries—middlemen, that is—in marketplaces and other commercial processes would lead to fewer handoffs and price mark-ups. The resulting efficiencies would redound to the all-important end-users, making their lives easier at the same time as they paid lower costs than ever before.*

A lot of these new players, though, wanted to insert themselves into established business processes to slice a percent of existing revenue flows into their own pockets by controlling a key “choke-hold” in a given process. I remember speaking at a European conference in 1999, for example, where a firm was trying to make the case for a middleman service to handle all the RFPs for a company in return for a small percent of the goods purchased. I was asked about the model and said that while I understood the middleman’s desire to tap into this mother lode I couldn’t see any reason why a firm would volunteer for such a “tax” in exchange for some minor potential market efficiencies.

Today, over 15 years later, big corporate players are fully aware that they, not some clever VC-funded middlemen, hold the keys to making their own processes more efficient. They’ve also figured out that their own “data exhaust” has a commercial value if leveraged properly. And with that epiphany, they came into direct competition with the information industry.

Major shipping companies, office supply companies, and even the IRS itself, for instance, are sitting on top of huge amounts of valuable metadata on every business and their activities. Want to sell to growing companies? There are dozens of indicators of growth in the hands of the private and public sectors:

  • Receipt of VC or other funding money
  • Shipping volume for the products they produce
  • Purchase volume of the goods they consume
  • Data on company head counts
    • hires minus fires
    • people on the company healthcare plan
    • capacity of the corporate parking lot

Now, some information firms have staked out these areas and found ways to gather and monetize these indicators. Many data sources, however, belong to owners unaccustomed to the business of selling metadata. Data aggregators work with a lot of them to monetize these data, but they are middlemen too, and as such, prone to disintermediation themselves.

So, will the information industry get displaced by the big corporates? Will the corporates go into the info business as a revenue-generating endeavor? The answer to both questions is, I think, no. But I can absolutely see the corporates creating consortia to pool their data for mutual benefit, and those entities could potentially be huge data players.

Imagine, for instance, a consortium of IoT-enabled appliance manufacturers selling usage data to the electric utilities, Angie’s List, appliance or appliance supply retailers, etc. Or, how about utilities sharing comparative data on usage in your area with municipal energy efficiency programs and building contractors? (“Homes your size in your neighborhood are using 33% less energy than your home. Do X to reduce your monthly bill.”)

As always, it’s hard to picture this happening without startups (i.e., middlemen) writing code to connect the dots, but over the long term the corporates may well hold the best cards at the table.

* This premise was not unsound and benefitted from the fact that established types of businesses (land line phones, taxis, hotels) were often taxed aggressively while the new players on the block were mercifully free of such encumbrances and thus could offer lower prices by definition.

Part 2 explores the impact of Native Advertising and Content Marketing on the B2B magazine industry.

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posted by Shyamali Ghosh on April 12, 2016

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