Wednesday, April 26, 2006

A perspective on intermediaries - the case of search engines

Search Engines frequently are classified as evil, too powerful and omnipotent in Internet space. Consider the following:

Search Engines as Leeches
Search Engines lead to Economic Assymetry
How Wal Mart is "Afraid" of Google - This one does not deride them, but mentions their power and how it can be leveraged

In a previous post, I presented a different viewpoint - classifying them as simple commission agents (intermediaries) who "charge" a service fee.

I think classification of search engines as leeches is taking it too far. In any sales situation, the person interfacing with the customer holds the most power within his organization. Take any company, you can always find engineers cringing about sales folks pocketing huge bonuses and the importance they hold in the eyes of the management. As Erik Keller points out, even in high tech companies in CRM space, expenses for sales+marketing and administration are nearly the same as those earned from license revenues! A CEO in any industry typically ends up spending most of his time "syncing up" with the sales folks (you can argue he does that to get a feel of the market and be in touch with customer trends but the fact remains that sales and marketing are the most prominent fucntions in any organization). The fact remains that the person who is the first link betweent he company and the customer is of prime importance. In the case of the distribution channel, invariable the last channel intermediary is the most powerful. No wonder there is so much talk about the power of the search engines.

Even in planning one's career, it is of importance to realise this fact. I have seen that guys with previous experience in sales and consulting end up a couple of notches higher than the ones in engineering and design. The power of knowing your customer cannot be overstated.

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