An infomediary is an internet company that gathers and links information on particular subjects on behalf of commercial organizations and their potential customers. Infomediary is a combination of info(rmation) and (inter)mediary.
The term first appeared in John Hagel’s and Jeffrey Rapert’s “Battle For Customer Information” (Harvard Business Review, 1997) to describe a new, mostly web-based business model that proposed the use of a personal agent-type portal that could transform personal data in currency, without any direct selling involved.
Types of Infomediaries
Infomediaries can be differentiated into two types, though the current escalation of personal data trade has created some popular hybrids that use many of the functions of these business models.
- The first type referred to is a neutral entity that provides consumers with unbiased information on a desired range of products and services. More popular in the 90s, sites such as AllAdvantage and CyberGold helped establish a medium in which information available for use by marketers and advertisers was starting to be controlled.
- The second type of Infomediary works by either selling one product over another or by using promos that favor the highest bidding vendor. While consumer privacy is protected, personal information is nonetheless marketed to businesses. Some consumers may even receive incentives or a percentage of the brokerage deals to agree to the above.
Thus, infomediaries often have either a vendor bias (making them vendor dependent) or a consumer bias. In recent years, the economics of this process not only focused on offers tailored to particular profiles but also on the large cash flows created by privileged deals of the vendor dependent infomediaries.
Upon a closer look on the value exchanged in vendor-consumer transactions, it is seen that beside its tangible characteristic, trust is of utter most necessity in the rapport. For all types of infomediaries, the guarantee that personal information will not be miss-used stands at the basis of the services provided. Benefits on the vendor side include targeting new customer and creating loyalty with existing ones. Plus, of course, the potential to spend less on data bases with more return.
The current popular infomediaries are more likely to be called hybrids, as the specific transactions still occur, but not as the sole purpose of the entity. Examples are Facebook and Amazon: while the latter focused on growing a community surrounding its services, Facebook is well known for creating personalized ads. This in essence means that personal information about their users is collected and then the information is used to sell advertising. Of course, there are the very simple and up to the point pay per click sites. The difference here is that whilst users look at ads targeted to their specific segment or category in order to receive money or other incentives, no specific action is necessarily taken and the information returned to the advertiser is often scarce and shallow.
Nonetheless, as the economics of personal data grow in importance and the value of each user to different providers is taken more and more into consideration, the physical stores and services will have to continue to match this ever developing internet entity that is the infomediary.