Jul
5
Making Progress – Modestly
Filed Under B2B, Big Data, Blog, Financial services, Industry Analysis, internet, mobile content, Publishing, Search, social media, Uncategorized, Workflow | Leave a Comment
Lets avert our eyes. The world of media tycoons, which lasted from the inexorable rise of Northcliffe (or Hearst and Pulitzer if you are on the other Side) to the Fall of Murdoch, seems increasingly like a bizarre episode in the long history of evolving information communications. And the current process of corporate mitosis could go on forever, as the former newspaper enterprizes (DMGT today, the press say!), on the whim of their brokers, seek to divide and sub-divide in a desperate effort to find the bit that had the value in it. Meanwhile a 15 year old in a garage in Derby or Des Moines is hitting the keys tonight to create again in a born digital world the service activity which represents in the cyber world fresh values which equate to things that might have intrigued a newsletter reader in those cities in the 1820s. Lets leave them to it, and creep away to look at what is already well-fashioned in terms of the future of eCommerce in the network, and alongside that reflect on the increasingly fascinating remodelling of the world of search.
I am driven down this route by the idea of what is happening at AutoTrader (UK). This Apax/GMG asset is just on the edge of the inevitable – abandoning print altogether. Although in austerity-riven budget Britain, sales gains have been modest at 1%, internet growth is still double digit at 11%, and while margins are very depressed, the partners (looking ruefully no doubt at the EMAP write-down) took a further £210m dividend. But what caught my eye was the idea that the way to restore margins was fairly obvious: cease print over the next 12 months. All of which took me back to a time in the 1990s when, as non-executive chairman of Fish4, the regional newspapers classifieds consortium, we sought to fight off the primacy of AutoTrader (AKA Trader Media Group). But they won, and for good reasons. They put software for classifieds inventory in used cars into the dealerships: they helped the dealer improve his business while helping him to upload stock to their databases more effectively. They started in primitive ways to improve the minisites and sales support – using video, owner interviews, and the beginnings, in conjunction with dealers, of inspection systems, accreditation and even warranty. And they worked effectively with the financial services players involved in the transactions because their focus was not just joining buyer to seller, but the whole deal and all of the margins created by it.
All of this came to mind a few weeks ago in a New York taxi as I listened to Darwin Melnyk talking about where he was taking his IRON Solutions (http://www.ironsolutions.com/) business. Backed by StarVest, IRON is a new generation version of old UK AutoTrader. Its focus is not used cars, but heavy equipment. Plant, crawlers, earth movers, caterpillars – and now onto massive tractors and combine harvesters. This is a lease/hire market, and in North America one where the user may be thousands of miles away from the owner, and the dealer, and the bank, and the big beast of a machine itself. It becomes imperative that a trust network is created, that users are able to see the trading records of dealers, that banks can lend against known and reliable valuations in a market, that inspections and the data arising from them are accurate, that videos are validated… because it is no longer possible to fly from Vancouver to Galveston to get the right tool at the right price, because the time/cost of doing the transaction that way just does not add up anymore.
So doing business this way adds up to exceptional value, reflected for the service operator by the value of his network directories, and the tightening grip of successful services of this type on niche markets. Do we really want two or three of these, if we have one, high trust, full market operator? And do we want all of our old support/risk management systems once networks like this have built credibility? You mean, less place for the commercial credit raters, or for the bank’s expensive processing and validation, or the credit insurer’s role in risk management? Yes, I mean that one day the knowledge in these B2B trading networks will be so strong that they will be able to certify their own trades, earning extra margins for themselves while reducing the cost if trading to the network participants. And that is Progress.
As these networks of traders become communities of course they share greater and greater amounts of user generated content. And as that happens they raise the investment that all users feel they have made in the system. So these people will not be going to Google to capture a wide range of offers – those offers could be toxic. However, we will see search evolve in specialised ways, and I was delighted this week to find myself talking to a team that had really appreciated this and taken a unique cut at search. So go to www.zanran.com and think about it. All my consultancy life I was always looking for the latest set of figures on newsprint sales in Belarus, or the growth pattern for smartphone use in Nigeria. So here is a search engine dedicated to data search and extraction, tuned and tailored to getting that graph or this piechart or those tables. Still in beta, it is a supremely sensible development and should be in a lot of industry toolsets in market research and science and engineering and elsewhere. One day, tools like this will be standard components of all of our workflow interfaces, but just at this moment it clearly demonstrates how the world of keyword search and page ranking is receding, to be replaced by more subtle and intelligent instruments. I see information service providers licencing in attributes of this type very rapidly as they race to add value in line with user expectations.