Disintermediation in Marketing: Risks, Opportunities, and Realities

The very heart of marketing—and business—is creating a strong connection between a brand and its customers. In the pursuit of convenience and efficiency, industries develop complex systems to build and maintain links between businesses’ tangible and intangible elements. Whether it’s manufacturing a car or providing a service, intermediation occurs whenever a third party is required to conduct business.

Today’s disintermediation trend in marketing reflects a broader societal shift toward a more direct connection between brand and consumer.

First, What Is Disintermediation?

Disintermediation is the process of removing or minimizing the role of intermediaries that stand between a manufacturer and their customers. Economists and business theorists have used the term to describe a broad shift in direct-to-consumer sales, financial services, and distribution networks. In short, disintermediation means the exclusion of middlemen in pursuit of lower consumer costs, faster deliveries or transactions, and higher business profits.

It’s worth noting that the strategy doesn’t always pay off, even in industries with longer histories of disintermediation. In many cases, the additional costs associated with direct-to-consumer sales (see: AllBirds, Nike, and more)  or the volatility caused by a lack of institutional norms (see: all things crypto) proved prohibitive and destructive to brands.

Unsurprisingly, marketers are aware (and wary) of the industry’s shift toward disintermediation – risks and all.

What Is Disintermediation in Marketing?

Disintermediation in marketing is the removal of intermediary agents between a brand and its target audience. Historically, intermediaries have played a significant role in bridging gaps between brands and consumers by specializing in essential capacities. Rather than having a designer in-house, brands worked with a marketing agency to access graphic design skills at a fraction of the cost of hiring a full-time employee.

Publishers played a similar role, creating marketplaces like TV and print where brands could access consumers with paid ads.

Some of the most familiar examples of intermediaries in the marketing industry include:

• Marketing agencies (hey, hi)
• Publishers (Print and digital)
• Media companies (TV, radio, streaming)
• Search engines

Digital disintermediation means removing or reducing the role these entities play, with the same goal as manufacturers; by eliminating intermediaries, brands can connect with their consumers without paying that graphic designer, consultant, or ad salesperson. While this may lower some costs, it exposes brands to the many risks of disintermediation experienced in other industries.

Breaking Down the Disintermediation Strategy

The central risk of disintermediation is complexity, and successfully navigating a direct consumer connection isn’t as easy as some brands expect.

The Advantages of Disintermediation

Lower costs (sometimes). For marketers, focusing on in-house efforts lowers marketing costs by mitigating the costs of advertising fees or relying on hefty paid media spend. That isn’t always the case; we’ll get to that in a minute.

Proprietary customer data. Direct customer interaction allows brands to collect first-party data, gaining deeper insights into customer preferences and behaviors. Relying too heavily on data from third-party sources (including Google, Meta, and Amazon) limits visibility for decision-makers.

More direct customer relationships. First-party data also allows brands to react quickly to changing consumer tastes and trends, build more insightful and accurate customer personas, and even identify their most valuable customers based on key metrics.

The Disadvantages of Disintermediation in Marketing

Increased marketing costs. While reducing spend on agencies may lower marketing costs in some cases, most companies end up spending more once they account for increased staffing, marketing software, or related areas like customer service.

Brain drain. Cutting ties with agencies and publishers also means losing access to their industry expertise and research. Intermediaries tend to understand industry trends and opportunities better, and losing ready access to this information is often detrimental to businesses.

Operational complexity. Expanding in-house marketing requires creating new processes and establishing new decision-making hierarchies. This usually requires additional investment in staff and technology and more time spent coordinating with other departments.

Examples of Disintermediation on the Internet

This process extends beyond the industrial side of marketing to websites, cell phones, and search engine results pages.

App Stores

Apple’s App Store and Google Play were intermediaries between app companies and consumers. Historically, app developers had to meet strict guidelines to get into these app stores and pay hefty fees for subscriptions or sales generated by the app. That’s slowly changing, with both Google and Apple being forced by European regulators to relinquish some of their more draconian restrictions for the first time.

This will make new apps more accessible to more consumers and reduce Apple and Google’s influence on iOS and Android devices, respectively.

On the SERP

Google has had SERP features like the local pack and featured snippet for years, all of which are designed to surface information from the website onto the search engine results page, reducing the need for users to click through. With AI Overviews, Google provides even more comprehensive answers to user search queries, distilling the best of the best into concise, clear responses.

In this case, Google treats the click as an intermediary, but marketers may ultimately pay the cost with fewer organic sessions and conversions. It’s too early to tell just how much of an impact Overviews will have on domains, but our SEO team is researching tactics to mitigate the effects of the zero-click SERP.

Don’t Disintermediate Me, Bro

So, what’s next for digital marketing? This industry is constantly changing, and while new technologies have made it easier for brands to market directly to consumers, there are still substantial barriers to getting messaging and content right. In many cases, the benefits of disintermediation are focused on the consumer, while brands are forced to wrestle with decisions, cost-effectiveness, and unpredictable results.

These are the conversations our team loves. After nearly thirty years in the industry, we’ve seen it all—and we can’t wait to see what’s next. Let’s talk; get in touch or call (231) 922-9977 today to get started.