Whatever happened to disintermediation? Terrible word, big idea. The thought was that the internet would enable buyers and sellers to connect directly, cutting out middle men who were just a cost in the system. Ebay is probably the largest and most successful business built on connecting buyers and sellers directly. Uber and Hailo do the same for car travel, in different ways – Hailo leveraging the existing taxi network, Uber seeking to bypass it. Most of these started as amateur alternatives to the established trading systems, but most have become a new channel for professionals – ebay and Amazon Marketplace being the prime examples. Airbnb is another. It may have started with a novel idea about filling your spare room but nowadays it’s mostly a holiday lettings site.

Travel agents and estate agents in particular were the businesses that were expected to be disintermediated out of business through the web. Seen as adding little value, described as mere aggregators of inventory, logic said they’d disappear. The web created a new shop window where buyers and sellers – of flights, accommodation, or of houses – could find each other easily and cheaply. So why would anyone other than the very rich or very time-poor pay an agency?

There was a good deal of consolidation and hard times in both industries, for sure, but new intermediaries have emerged. In both cases, it’s as much to do with the needs of the seller as the buyer. The harbingers of doom forgot that in these cases it’s the seller who pays the agent, not the buyer. It turns out most of us prefer to have someone else name a price and then show people round our homes. Usually they’re still the estate agents of old, operating with a new shop window on everyone’s desk, and now in our hands. For travel, there is so much inventory that it’s inefficient for the sellers to have only a single channel to market. It’s equally inefficient for buyers to search for a holiday by visiting the website of every airline or hotel – that’s even if you know what to search for.

Now these markets are being re-intermediated, in new ways, online. There are sites which consolidate information on property values, for example, to help buyers and sellers alike. In travel, sites like Skyscanner scrape information from other businesses to present a single view from multiple competitors. This online reintermediation seems to have no limits. Skyscanner scans other aggregators like Expedia and Flights.com. Trivago scans other hotel aggregators like Booking.com and LateRooms. I’m told Secret Escapes is making good money – but it’s little more than a portal and some web scraping, together with a very attractive, upmarket woman as the face of the business on TV. There is a consumer benefit but little differentiation in an increasingly crowded market.

Perhaps the ones we didn’t see coming were those which crowd-source information to help us make choices. Trip Advisor is genius, is it not? Soundcloud has changed how talent spotting in the music business works. Getting noticed on Soundcloud is just another form of crowdsourcing, which means the labels know what’s popular before they sign the talent. Both are adding value, not just using clever technology to repackage information that’s already out there. It would be easier – and more fun – to write the value propositions and brand narratives for these two than for any of the travel-related sites, which I suspect would all be much the same.

So, even in this world of clever technology, there’s still a need for the fundamentals of marketing: motivating value propositions, woven into an attractive, relevant brand. Strong brands are the final frontier in building a compelling business that customers warm to, and flock to. This is different from a flashy advertising campaign to build awareness and generate leads. Hotels4U? Not 4 me, thanks.

It feels like we are due for a new wave of consolidation, to shake out those businesses which aren’t doing anything distinctive, or which add value only through the same mechanical process as many others. The ones which have bothered to create a true brand will surely fare better when this comes.


You might also like these posts about technology-based start-ups:

Hot Chip: the UK tech start-up scene

Hot Chip 2: David, say hello to Goliath

Hot Chip 3 : can you pick a winner?

Thought leadership | January 2015