Agents Marketplaces

This is a great post by Casey Accidental on the dangers of agents marketplaces. When Agents Attack: How AI Collapses General idea is that traditional marketplaces have demand creation and demand capture. Vertical marketplaces provide value by briding them together. Agents eat into this by removing the need for demand capture since you no longer need to go to a marketplace to find a product. They are already the daily habit for aggregator world.

Google did this a while ago. Instead of funneling traffic directly to marketplaces, they started to show results for products directly in the listings (google shopping) rather than directing to the marketplace.

In an agentic world, an LLM that has a deep understanding of your preferences will be theoretically be the first to understand new intent to give you ideas and inspiration for, will have the best understanding of what choices are reasonable for you, taking away a lot of pricing and comparison work search engines and social networks have had to delegate to marketplaces in the past. This collapse of the marketing funnel changes the customer acquisition economics of every marketplace.

In theory, chatGPT will want a piece of the ad revenue google is capturing for brokering the demand gen. But marketplaces might not be willing to pay as much, since chat is not actually funnelling traffic to the marketplace, so they do not get any brand loyalty or brand capital from the user. They become a commodity.

Marketers today assume that visitors build brand affinity, convert (where the marketplace takes a cut), and can be re-marketed to. This increases the chances of direct purchases in the future. Therefore, a marketer might measure that transaction cost on a payback period basis based on the lifetime value of similar customers from that channel.

In a world where agents potentially do all that discovery and booking work for the user, the marketplace receives potentially none of those benefits. Sure, the marketplace will take the additional transaction revenue, but it will no longer use payback period math, but unit economic math for a single transaction as it can no longer feel confident it’s acquiring the ability to do future outreach, create brand preference, and increase the chances of direct purchases in the future.

Other blogs

• stratechery on yelp vs google as aggregator