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Interesting piece in Advertising Age saying that marketers who are concerned about the phenomenon of disintermediation – when technology makes it possible to cut out the middleman between the source of a product and the consumer – are keeping their eyes on the wrong ball.

The real problem – and the one to which marketers really need to pay attention – is growing irrelevance to the consumer. The Ad Age piece suggests that when disintermediation takes place, it is because somebody has figured out a better way of doing things, a more compelling and relevant way to appeal to consumers.

In other words, disintermediation is the symptom, not the problem.

“If you sense the cold breath of ‘disintermediation’ on your back, more likely than not a bunch of upstarts are delivering your business’ core value proposition for less cost and in a better fashion than you are,” Ad Age writes. “And while it seems a bit obvious, it’s nevertheless true: You’ve probably fallen victim to old Railroad disease - you thought you were in the train business, but meanwhile, the other guys have figured out a better approach to moving cargo around the country.”
KC's View:
As we said in the headline, they’re playing our song.

Too many marketers focus on symptoms instead of real problems, and this is a perfect example. It’s a natural occurrence. After all, symptoms are easier to see and deal with, while fundamental problems tend to require fundamental responses…which are a lot more difficult to craft.

While many retailers complain about Wal-Mart and “big box” stores being the source of all their competitive problems, what they aren’t facing is the fact that these competitors have made inroads largely because these other stores have become irrelevant to shoppers’ needs and desires. And, they’ve decided to let these bigger stores define what relevance means, which is as big a mistake.

By the way, another example of disintermediation that came to light yesterday was when CBS News announced that rather than starting up or investing in yet another cable news channel, it will instead launch, according to the Wall Street Journal, “a souped-up Web site featuring an increased number of free video clips” – in effect, taking advantage of the growing availability of broadband to develop a different kind of expanded news presence.

This is of interest to us, mostly because the online news business happens to be our business. The analogy holds in this case, because CBS News didn’t just need to expand its business – it also had to become more germane to consumers at a time when its own missteps have threatened its relevance and credibility.

The question that CBS has to answer is whether this new online presence will address the symptom or the problem. This is a problematic question to answer, since no matter what it does, someone will be unhappy. (That’s the politics of the news business.)