Emergence of Cybermediaries and Content Providers

With the rapid development of the Internet starting in 1990s, many authors (such as Chaffey, 2003:52; Hoffman, Novak, Chatterjee, 1995) argued that the introduction of the Internet would lead to disintermediation - eliminating intermediaries in the value chain between manufacturers and end customers. Jacobs claims that in the new economy, due to the new communication opportunities, distribution channel is moving from two or three intermediaries to zero or one intermediary allowing both cost savings and customization (Jacobs, 2002).

However, it was demonstrated that even if the Internet can decrease the number of intermediaries in some fields, companies can still exploit their expertise and adjust their activities to the new conditions in order to stay competitive at the market (Giaglis, Klein, O'Keefe, 2002).

Sarkar et al. remark that the Internet offers opportunities for cybermediation -emergence of new types of intermediaries operating at electronic markets (Sarkar et al., 1995). Cybermediaries, or sometimes also called infomediaries (Jacobs, 2002), are "organizations that perform the mediating tasks in the world of electronic commerce" and it is anticipated that their influence will increase (Sarkar et al., 1995).

Strauss, Adel and Frost (2006) define cybermediary as "an online organization that aggregates and distributes information". Online cybermediaries act as the middle-man between the buyer and the seller.

As Jacobs points out, cybermediaries introduced new possibilities of sales channel management and have become a potential competitive advantage for the companies cooperating with them, but on the other hand, they can also present a threat in the means of introducing new level of complexity. Thus, managers need to understand new methods in electronic channel management in order to be able to produce adequate decisions (Jacobs, 2002).

According to Sarkar et al., cybermediaries offer following services to the customers:

■ Search and evaluation - facilitating choice of retailer, product or service.

■ Needs assessment and product matching - identifying customers' needs and selecting the right product or service for them.

■ Customer risk management - decreasing the level of perceived risk.

■ Product distribution - physical distribution of the products or services. (Sarkar et al., 1995)

Also merchants benefit from the cybermediaries' operation in different ways and they purchase cybermediaries' services such as:

■ Product Information Dissemination - informing customers about new products, services, special features etc.

■ Purchase Influence - intermediaries can influence purchase decisions to a great extent.

■ Provision of Customer Information - providing detailed information about customers and their buying behavior.

■ Producer Risk Management - reducing producers' risk connected with selling products or services at electronic market place. (Sarkar et al., 1995)

In spite of growing importance of cybermediaries, their role in promoting products and services on the Internet is not explored sufficiently. OECD states in its report about impacts of electronic commerce that the role of intermediaries will be crucial in the future development and it should be more researched (OECD, 1999). Jacobs also mentions that little have been written in the area of marketing communication via cybermediaries and further research in this field should be conducted (Jacobs, 2002).

Cybermediaries offering online advertising to merchants (though links or product listings) are referred to as content providers (Sarkar et al., 1995). They are defined as people or companies that "distribute copyright content via the Internet" such as owners of websites, bloggers or forum members (Eisenmann & Brown, 2000). Content providers are sometimes also named publishers. (Wikipedia Affiliate Marketing, 2007).

Content providers vary in size. They range from big companies such as magazine and newspaper publishers, to physical persons, such as blog owners. According to Zeff, both big and small content providers can make use of online advertising as a revenue source. Big websites have high-volume audience, whereas small websites usually are able to deliver niche audience (Zeff, 1999:4-5). Duffy notes that the number of small content providers is very large. They comprise of small companies and individuals that are familiar with possibilities that online advertising offers. (Duffy, 2005)

Destroying Adwords

Destroying Adwords

Adwords or Pay Per Click advertising is essentially the 21st century equivalent of direct marketing, allowing advertisers to test ideas in hours rather than months. Learn more about Google Adwords and PPC advertising.

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