Pass Go, Collect $200- Direct to consumer services

Most of us are familiar with that phrase from the game Monopoly but in the world of business and marketing it could be tweaked slightly to read, pass middle man, collect money directly from buyer.

As use of the internet has grown, so has e-commerce and outlets available for purchasing goods and services. No longer are companies expected to deal separately with suppliers, storage, shipping and other costs. Instead of the traditional route, they can go directly from the factory to the buyer. Of course these options are not without ramifications. If a company was set up only as a producer, they may not have the staff to deal with shipping and tracking sales. The company website, once merely a location for posting information about products and where they can be bought, might need to be upgraded to an e-commerce site that requires additional security for payments. There is also the issue of inventory, can their larger customers still be supplied with goods while handling additional demands for products from direct, online customers?

To illustrate this point, a recent article talked about how Apple is in talks with Disney  and CBS to stream television direct to viewers, bypassing cable companies. There are many issues that arise from this. The first is that cable companies derive large percentages of their income from advertising. Shows streamed directly to viewers, as they are now on sites like Hulu, have minimal opportunity for multiple advertisers to purchase space. In a way this parallels the demise of newspapers who lost much of their revenue when readers began getting their information from the web, where it was available for free.

One large difference here though is that the cable companies are still holding a few aces. One is that direct-to-consumer broadcasting still requires infrastructure to support internet connections. Many of these companies offer internet services so they would still be required in order to deliver a product. Same goes for smartphones and web browsing. Cellular phone companies invest in towers, transmitters and people to maintain networks, which again are necessary to deliver content to consumers.

How does this impact the world of marketing? It could change the methods for delivering information, focusing not on clever ads to be inserted into programs, but maybe sponsorship of specific programs or the creation of entirely new content (like YouTube videos or short movies) that can be delivered directly to consumers.


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