Aggregators: The way to win?

You wake up in the morning and you get an e-mail from Groupon. You shower, and get another from Buy generic levitra online

ef=”http://www.giltcity.com/”>GiltCity. Then you drive to work and LivingSocial shoots you a line. By lunch, you’ve received e-mails from seven different group sale sites, in addition to all the other information and content you get from news sources, friends, family, co-workers, and other sources. On the other hand, you could have easily used Yipit, or one of the many other aggregators for daily deals and avoided some of the noise.

Aggregators are websites or programs that combine, collect, and/or assemble data or information from more than one “source” and provide a centralized repository or interface for users to access this information. Everyone has probably used one at some point considering the multitude of applications – news, research, reviews, search, social networks, and especially shopping and price comparisons/quotes.

The benefits of aggregators are clear and meaningful:

  • Simplicity: From one location for information to a centralized log-in, aggregators streamline and centralize content and processes to make consumption – and possibly actions, like purchases – easier for consumers by cutting down search time and overall effort.
  • Breadth: With information and data from multiple sources, aggregators have the benefit of expanded catalogs, options, and information. This can help with diversification, across categories or genres, and enable a wider reach (see below).
  • Customization / Filtering: Due to expanded content, aggregators often have a unique ability to allow users to control or customize information. Users are able to specify the type of information they want and what content they don’t want to see. This “curation” is important, particularly when aggregators get too big and breadth is overwhelming.
  • Wider Reach: In theory aggregators drive more traffic if they are able to capture all of the traffic that would have gone to the individual sources. They are able to take advantage of simplicity and breadth to attract more users and potentially pull traffic from the individual sources themselves.
  • Decreased Costs: Since aggregators are not producing content or providing services, they do not experience the same costs that the sources have. For example, a newspaper has to pay people to write stories but news aggregators don’t have to pay for anything but their technology (usually a one-time fixed cost with tweaks). However, companies also do not get the same upside and/or benefit from revenues (see next section). Similarly, aggregators don’t necessarily have to pay as much in advertising because as sources advertise and increase their brand value (and the value of the industry), the aggregators likewise benefit from carrying the same information, content, or products.
  • Data / Information Ownership: With wider reach, aggregators have a better understanding of consumer patterns, trends, and purchase behavior. In some cases, they may not even send users to the source so they solely own the information on that consumer, and may use it to their benefit (such as feeding back in to customization or recommendations).
  • Ability for Hybrid Model: Though many aggregators may simply surface information, they could also be in the content production or product offering space. For example, MyNines, which aggregates flash sales, could offer their own flash sales as well as displaying those of others.
  • Reduces Mobilization Risks: In networked businesses, there are many barriers to user adoption and aggregators mitigate many of these, simply by circumventing many of the relationships of networked businesses (i.e. they don’t often create network effects, they just benefit from other services which do). But they also decrease the risks of “backing the wrong horse” (users fear backing a platform that will fail) and other coordination problems involved with getting timing right amongst multiple parties.

While there are many obvious advantages to the aggregator model, there are also plenty of drawbacks:

  • Dependence on Sources: Though in some cases it is permissble to scrape or crawl for content, in some situations it is not. Aggregators are very much at the whim of the sources and their guidelines around access to their information. As a result, aggregators rely heavily on the supply from and success of the sources with which they work.
  • Misalignment of Interests: Although aggregators can increase traffic, awareness, and exposure to sources, incentives are still somewhat misaligned between the two parties. Since every aggregator and sub-industry has different specifications and models of interaction, it is hard to say the degree to which misalignment is disruptive to the functioning of the aggregators. Much of this is based on the distribution and allocation of value and thus aggregators have the ability to share value by taking percentages or royalties versus entire sales, etc.
  • Limited Value / Ability to Monetize: Based on the business model, some aggregators are limited in their value captured, though they have fewer costs. For example, they may only get 20 cents for each referral or a small percentage of the total sale (or advertising revenue). Again this is dependent on the negotiated policy or industry practices, but it may also be the case that aggregators are not able to capture any value because they simply act as brief intermediaries and hardly interact with consumers long enough to make monetization possible.
  • Similarly Difficult to Attract Users: Though aggregators have the benefit of multiple reputable sources to boost attractiveness, they have just as difficult of a challenge to customer acquisition and awareness-driving. They may benefit from free search as they are associated with the sources, but they likely still have to invest in marketing and advertising in the same ways that sources would.
  • Blurred Responsibility: If content, information, or services are coming from one source but being displayed by an aggregator, what happens if there is a technical problem or issue with that information? Who is accountable? And who bears the costs associated with service and/or other maintenance?

While aggregators have distinctive strengths and weaknesses, they undoubtedly avoid some of the greatest difficulties associated with mobilization, implementation, and attracting users. They provide great value to users and change landscapes of industries and information. It will be interesting to see how they change and morph over the coming years, but one thing is for sure – this is not the last we’ll see of them.Rich Text AreaToolbarBold (Ctrl / Alt+Shift + B)Italic (Ctrl / Alt+Shift + I)Strikethrough (Alt+Shift+D)Unordered list (Alt+Shift+U)Ordered list (Alt+Shift+O)Blockquote (Alt+Shift+Q)Align Left (Alt+Shift+L)Align Center (Alt+Shift+C)Align Right (Alt+Shift+R)Insert/edit link (Alt+Shift+A)Unlink (Alt+Shift+S)Insert More Tag (Alt+Shift+T)Toggle spellchecker (Alt+Shift+N)▼
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You wake up in the morning and you get an e-mail from Groupon. You shower, and get another from GiltCity. Then you drive to work and LivingSocial shoots you a line. By lunch, you’ve received e-mails from seven different group sale sites, in addition to all the other information and content you get from news sources, friends, family, co-workers, and other sources. On the other hand, you could have easily used Yipit, or one of the many other aggregators for daily deals and avoided some of the noise.

Aggregators are websites or programs that combine, collect, and/or assemble data or information from more than one “source” and provide a centralized repository or interface for users to access this information. Everyone has probably used one at some point considering the multitude of applications – news, research, reviews, search, social networks, and especially shopping and price comparisons/quotes.

The benefits of aggregators are clear and meaningful:
Simplicity: From one location for information to a centralized log-in, aggregators streamline and centralize content and processes to make consumption – and possibly actions, like purchases – easier for consumers by cutting down search time and overall effort.
Breadth: With information and data from multiple sources, aggregators have the benefit of expanded catalogs, options, and information. This can help with diversification, across categories or genres, and enable a wider reach (see below).
Customization / Filtering: Due to expanded content, aggregators often have a unique ability to allow users to control or customize information. Users are able to specify the type of information they want and what content they don’t want to see. This “curation” is important, particularly when aggregators get too big and breadth is overwhelming.
Wider Reach: In theory aggregators drive more traffic if they are able to capture all of the traffic that would have gone to the individual sources. They are able to take advantage of simplicity and breadth to attract more users and potentially pull traffic from the individual sources themselves.
Decreased Costs: Since aggregators are not producing content or providing services, they do not experience the same costs that the sources have. For example, a newspaper has to pay people to write stories but news aggregators don’t have to pay for anything but their technology (usually a one-time fixed cost with tweaks). However, companies also do not get the same upside and/or benefit from revenues (see next section). Similarly, aggregators don’t necessarily have to pay as much in advertising because as sources advertise and increase their brand value (and the value of the industry), the aggregators likewise benefit from carrying the same information, content, or products.
Data / Information Ownership: With wider reach, aggregators have a better understanding of consumer patterns, trends, and purchase behavior. In some cases, they may not even send users to the source so they solely own the information on that consumer, and may use it to their benefit (such as feeding back in to customization or recommendations).
Ability for Hybrid Model: Though many aggregators may simply surface information, they could also be in the content production or product offering space. For example, MyNines, which aggregates flash sales, could offer their own flash sales as well as displaying those of others.
Reduces Mobilization Risks: In networked businesses, there are many barriers to user adoption and aggregators mitigate many of these, simply by circumventing many of the relationships of networked businesses (i.e. they don’t often create network effects, they just benefit from other services which do). But they also decrease the risks of “backing the wrong horse” (users fear backing a platform that will fail) and other coordination problems involved with getting timing right amongst multiple parties.
While there are many obvious advantages to the aggregator model, there are also plenty of drawbacks:
Dependence on Sources: Though in some cases it is permissble to scrape or crawl for content, in some situations it is not. Aggregators are very much at the whim of the sources and their guidelines around access to their information. As a result, aggregators rely heavily on the supply from and success of the sources with which they work.
Misalignment of Interests: Although aggregators can increase traffic, awareness, and exposure to sources, incentives are still somewhat misaligned between the two parties. Since every aggregator and sub-industry has different specifications and models of interaction, it is hard to say the degree to which misalignment is disruptive to the functioning of the aggregators. Much of this is based on the distribution and allocation of value and thus aggregators have the ability to share value by taking percentages or royalties versus entire sales, etc.
Limited Value / Ability to Monetize: Based on the business model, some aggregators are limited in their value captured, though they have fewer costs. For example, they may only get 20 cents for each referral or a small percentage of the total sale (or advertising revenue). Again this is dependent on the negotiated policy or industry practices, but it may also be the case that aggregators are not able to capture any value because they simply act as brief intermediaries and hardly interact with consumers long enough to make monetization possible.
Similarly Difficult to Attract Users: Though aggregators have the benefit of multiple reputable sources to boost attractiveness, they have just as difficult of a challenge to customer acquisition and awareness-driving. They may benefit from free search as they are associated with the sources, but they likely still have to invest in marketing and advertising in the same ways that sources would.
Blurred Responsibility: If content, information, or services are coming from one source but being displayed by an aggregator, what happens if there is a technical problem or issue with that information? Who is accountable? And who bears the costs associated with service and/or other maintenance?
While aggregators have distinctive strengths and weaknesses, they undoubtedly avoid some of the greatest difficulties associated with mobilization, implementation, and attracting users. They provide great value to users and change landscapes of industries and information. It will be interesting to see how they change and morph over the coming years, but one thing is for sure – this is not the last we’ll see of them.
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