Crush Your Competition by Exploiting the Arbitrage in Your Industry

Are the businesses in your industry using all marketing options available to them to their full potential?

The answer is no.  And in many industries, the answer is, “not even close”.

If you take the time to study your industry and your competitors, you will find that there are numerous examples of marketing arbitrage ready for you to exploit.

What is Arbitrage?

Arbitrage is a term traditionally used with financial instruments like commodities and stocks.  There are sometimes differences in the price someone is willing to pay for a financial instrument and what people are selling them for. Arbitrage is the exploiting of this middle price area where you simultaneously buy and sell that financial instrument and make a profit off of the price difference between the two.

You use arbitrage all the time.  A simple example is going to a garage sale where you see an antique table selling for $10.  You know it is worth more, so you buy it and then resell that table on Ebay for $50.  You took advantage of the arbitrage in what the table was selling for and what it was actually worth.  In this case you made a cool $40 because you were able to spot the arbitrage where no one else was.

If you are in a service industry like mortgage brokers, real estate agents, cleaning companies, you probably know of several companies offering to sell leads to you for a price.  These companies are already taking advantage of the marketing arbitrage in your industry.  In this case, they know they can get a lead at a certain price and then sell it to you for a much higher price.

So now that you understand what arbitrage is, do you see how this can be applied to marketing?

Marketing Arbitrage

Marketing legend, Jay Abraham, was the one who introduced me to the concept of looking for marketing arbitrage opportunities.

I'm primarily an internet marketer, that is what I sell and where I spend most of my time.  But I also own another business where we spend plenty of time and money on traditional marketing so finding marketing arbitrage opportunities is not just for online marketing.

You can find marketing arbitrage opportunities in many areas, like where businesses are marketing, how they package/position their product or bringing ideas from another industry into yours.

Finding the  Arbitrage in Your Industry

In some industries, marketing arbitrage is easy to spot.  Many traditional industries are still stuck in the stone age,  thinking that a Yellow Pages ad or a roadside billboard places you in on the cutting edge of marketing.

Lawyers, especially older firms, are an example of an industry still living in the past.  I personally know of two lawyers who have been paying for Yellow Pages ads for over 25 years just because that is what they have always done.  Neither of them has a website.  Yes, no website.

Car dealers still spend the vast majority of their advertising budget on billboards and newspaper ads.  They still go with the outdated motto of, “people are coming through the door and buying cars so it must be working”.  What a waste of money and what an opportunity for the car dealer down the street who is ready to venture into new marketing territory and to think differently from their dinosaur peers.

On the flip side, you have many internet first companies spending 100% of their resources with online marketing, which is why you are seeing some internet companies starting to use more traditional methods of advertising, they are looking for areas of opportunity in their industry that are not being exploited.

While many of the arbitrage opportunities we are speaking about revolve around marketing, you can find opportunities in the actual product/service, technology and how you deliver your product/service.

If you want to spot the opportunities, then you need to study what your industry and competitors are doing to market themselves.  Search online, subscribe to competitor newsletters, buy the local papers and look through the ads.  Buy their products, call their companies, let their sales reps give their pitch to you (or a friend) You need to know what your competitors are doing (or not doing) before you can find the arbitrage and exploit it.

Some questions to ask.

• Where are they spending their time and marketing dollars?
• Who are the innovators in my industry and what are they doing differently?
• Who really impresses you with their marketing?
• What was the last big change or innovation in your industry?
• Are the businesses in your industry marketing the same way they did 10 years ago?

What you will usually find is that there are a handful of first movers who are always on the front line of new things, some do it very well and some are still trying to figure it out.  The majority of your competitors though are still stuck in the status quo, going along with everyone else like a school of guppies.

Some industries innovate faster than others, but many are just waiting for someone to come along and turn the industry upside down.  In your case, you don't have to turn your entire industry upside down (unless you want to), just your local market.