Why You Should Ignore Your Competition & Use “Arbitrage Marketing”
Posted by Brad Smith
People love tactics.
They want that one piece of advice that will flood their website with traffic.
They need to find the 5 activities that will make them more money instantly, without breaking a sweat.
And they can’t understand why someone has so many Twitter Followers, when they do the exact same things.
But they have it all wrong. Tactics, by themselves, are essentially useless.
What worked for someone else won’t work for you.
Image courtesy of karma-police
The Extreme Importance of Timing
A large part of success comes down to timing.
When you launch a product, start your own business, and what online marketing tactics you’re going to use.
If you hit something at the right time, then you’ll discover amazing results.
It worked like a charm… until other people caught on.
It’s still effective today. But it’s much more expensive. You can’t build your business by only using AdWords anymore.
When Zynga originally launched on Facebook Apps, they were able to reach an incredible amount of people in a short amount of time (largely by spamming their friends).
Today there is more competition, and Facebook limits how you can market your app to people.
Would Zynga be successful today if they launched on Facebook Apps? Sure… but you can argue that they wouldn’t be worth as much or have grown as quickly in such a short amount of time.
That’s why people have so much luck when they’re early.
Look at how successful Chris Brogan is on Twitter. Sure he’s good. But he also started with nothing like you and me.
He got on Twitter early, found out what worked, and put a lot of time and energy into it. Now it’s obviously paid off.
The trick is finding out how to take advantage of opportunities at the right time.
Here’s how you do that.
What is Arbitrage Marketing?
The term arbitrage is typically used when discussing currency trading.
Basically, it’s a way to make a “riskless” profit by exploiting price differences in different currencies.
For example, let’s say you were able to take your American Dollars, buy British Pounds, then take those Pounds and buy Japanese Yen, then take those Yen and buy American Dollars.
At the end of the day, you were able to make $0.30 on each American Dollar. That may not sound like much. But when you’re moving around millions of dollars, it begins to add up fast.
You can do this by searching for and finding small, temporary price differences. You spot a momentary opportunity, and then you move quickly to take advantage of it.
You can do the same thing with online marketing tactics.
Because the effectiveness of online tactics always changes.
Article spinning is useless since the Google Panda update, and using too many Keywords will flag you as a spammer.
But SEO overall is still a great tactic. Search is still king when it comes to driving predictable website traffic.
Over time, specific tactics become less useful (Twitter) or much more expensive (AdWords) when they’re adopted on a large scale.
So as your competition moves in, the tactics you’re having success with begin to become less valuable.
Which begs the question…
How do you spot new opportunities?
The 5 Step Formula to Using Arbitrage Marketing
1. Find Tactics with Low Barriers to Entry: The first step is to look for opportunities that are easy to get started, and won’t cost you much upfront. That can mean the actual price (AdWords CPC), or the indirect price (more time, effort, people, etc. needed to successfully use that tactic).
2. Low Competition: Competition drives the price up. When there’s more competition, you have to invest more to receive a better return. As a result, the price to get started is driven up and it’s harder to get going. Instead, you should look across industries and see what works. It’s easier to adopt what other people are doing when you’re not competing directly with them.
3. Make Little Bets: No one knows what will work best. So you have to try a lot of little experiments that might work… or might fail. They key is to make sure that the failure doesn’t really cost you much. Focus on learning instead of avoiding mistakes in this stage.
4. Discover Outsize Returns (compared to alternatives): After you start making little bets and tracking the results, you should discover something interesting. Some tactics will be OK, but others will work really well. You need to look deeper at these tactics that work really well, and see if it was luck, or if it’s repeatable. If it was earned and repeatable, then you need to move on to the next step.
5. Double Down (to the exclusion of other things): Chances are, you’re already overwhelmed. You don’t have much more time, energy, or money to give each day. So when you discover a great opportunity, you need to stop doing other things that don’t work well and go “all-in” on those that do. Remember that timing is of the essence. You may only have a brief window of opportunity before competitors catch on and it’s too late.
There needs to be a reason behind everything you do.
Don’t jump on the social media bandwagon if you have no idea how it will help your business.
If you want to grow quickly, then you can’t do what everyone else is already doing. You’ll never catch up.
Instead look for new, uncharted opportunities.
It may take you awhile to find ones that work.
But the rewards will be worth it.