How The Internet Impacts Real Estate Agents, Insurance Brokers - and HR Analysts

I read an interesting article in the USA Today describing how the Internet is "Radically [Changing] how Buyers, Realtors Operate". The article says home buyers are finding more information via the Internet and sellers are doing more of the traditional agent's work via the Internet. And, fewer buyers think they even need real estate agents to supply vital information. The article also says "technology is shifting knowledge and power to buyers and sellers. In doing so, it's loosening Realtors' long-standing control of vital information and cutting into their sales commissions.".

The USA Today article goes on to say how "..the Internet is a significant threat to Realtors, who in previous decades have had iron-grip control over all necessary information for those seeking to buy or sell a home",

In the best selling book Freakonomics, the authors point out that in the late 1990s, the price of term life insurance fell dramatically when enabled a customer to compare the price of term life insurance sold by dozens of different companies. The Corporate Research Group had this to say about this phenomenon:

"What Levitt and Dubner (Freakonomics authors) are really talking about is how the accessibility of accurate information can dramatically affect the price charged for a product or service. We’ve seen this phenomenon drive down the price of term life insurance, commissions charged by stock brokers and realtors, and the prices of hundreds of other products and services".

All this got me thinking about how the Internet has and will continue to change the way HR products and services are bought and sold. Some of the changes we are already seeing. In the research report "Trends in HR Marketing: HR Buyers' Behavior" we describe how increasing numbers of human resource professionals turn to the Internet first when researching new products and services. This is having a dramatic impact on how HR suppliers spend their marketing and PR dollars. A follow-up HRmarketer Trends report surveying how HR suppliers are allocating their marketing and PR dollars pointed out, suppliers are spending less on print materials and print advertising and spending more on Marketing PR tactics that increase their online visibility, site traffic and search engine rankings.

Another not so obvious change may be the decreasing importance of analysts, especially informational analysts but to some extent financial analysts as well. Financial analyst are usually employed by a Wall Street type firm and make predictions on stock prices and other financial matters of a company they "track" (e.g., Merrill Lynch). Information analysts are typically not tied to Wall Street and comment on the non-financial aspects of companies they track (e.g., Gartner). I've always been a little skeptical about financial and information analysts. The reasons are (a) they are rarely ever right and (b) most have an agenda that reflects the interests of those who are paying their salary (e.g., companies that "sponsor" a research report are more likely to be included in the report than those who do not).

Now I don't mean to pick on all analysts. There are many very qualified independent analysts in the human resource space (e.g., John Sumser). But the fact is, information that you had to once pay an information analyst to obtain is now readily available on the Internet. And with the rise of social networking sites, this will become even more the case. For example, HRmarketer will be launching a B2B social networking site in 2007 that brings together HR professionals and HR suppliers. These types of B2B "communities" allow HR suppliers to comment on their experiences using certain HR products and services - including experiences with purchasing, implementation and ongoing use of such products/services. If these types of B2B social networking communities take off, you may see the role of the analysts change. Yes, there will always be a role for real estate agents, insurance brokers, and analysts - but for different reasons than exist today. Stay tuned.