Content Arbitrage

When I worked my first job on a Wall Street bond trading desk, I was fascinated by financial arbitrage, one of the ways that traders made money.

This technique involves taking advantage of a temporary price difference in two or more markets and is usually executed by simultaneously buying and selling the same security. A pure arbitrage involves nearly zero risk.

For a simple example, imagine the price of gold is at $1,600 an ounce in London and at the exact same time it is $1,620 in New York. A trader could simultaneously sell in New York and buy in London to lock in a $20 profit. (This simple illustration ignores risks and transaction costs).

Content Arbitrage

I've used what I sometimes call "content arbitrage" for years. Adapting the definition from the financial markets, content arbitrage involves finding information in one place and revealing it in another to take advantage of temporary differences in the knowledge level of people in those two markets.

We've all experienced content arbitrage in action. You're at your desk when somebody walks in and says: "Did you hear...?" and proceeds to tell you about the competitors' new product, or the CEOs resignation, or an earthquake, or a some other important information. One person learned the news and told another.

Content Arbitrage and Real-Time Marketing

But when it involves publishing that content as a form of marketing then content arbitrage gets really interesting. Here are some examples:

You're quietly checking out Google News while at a conference and some breaking news about your industry crosses the wires. You immediately grab the URL to a story and post it on Twitter using the conference hash tag. You "buy" the content on Google News while everyone else is paying attention to the speaker and then "sell" it by tweeting it to those who do not yet know about that news. The benefit for you is that you're seen as knowing things quickly and you'll get noticed (and re-tweeted).It's great for your personal brand.

Or you're watching television and an industry expert says something remarkable or controversial. If you blog about it right away, you're the first to share with the wider marketplace who had not been watching.

Content arbitrage, by definition, exploits temporary differences in knowledge levels. So you've got to be really fast when you jump in. Soon everyone will know the big news and if you wait too long to blog or tweet you look silly if people already know.

It's all about real-time. The more you dilly-dally the more the market for that information becomes stable again (when everybody knows the news already).

Straying into someone else's market

Content arbitrage also occurs when people stray into each other's territory on purpose to exploit simultaneous differences in information markets.

How about this: Ask kids what's hot in school and why. Listen carefully to what bands, movies, social networks, and other things are all the rage. You may have information that you can exploit in another market.

Or this: Watch for news releases from government agencies. You can sometimes spot an important development in your market that people aren't yet aware of. If you're first to blog it or explain what it means on a short video, you can effectively newsjack that release and have your industry's media quoting what you said in your blog or video. Not to mention the positive exposure you get to your existing and potential customers.

Content Arbitrage in the Financial Markets

Bringing this idea back to the financial markets, smart traders use content arbitrage to read beyond the financial newswires on their workstations, looking for emerging trends within publications read by the general public.

By the time news appears on the wires it's already too late. They might read Seventeen Magazine to learn about a hip fashion craze or Shape for the diet trend of the month. Even more interesting are those who lurk in chat rooms and read blogs for the nuggets of information that haven't yet hit mainstream publications. If you were the first to buy beef futures because you spotted an emerging low-carb diet trend before the financial wires wrote about it, you cashed in big time. Any time one information market (say the financial newswires) says one thing about a topic and the blogs and chat rooms reveal something completely different someone can profit. Cool—people actually get paid to do this.

But there's a catch. With all forms of arbitrage, the potential to profit only exists as long as there's an exploitable difference between simultaneous markets. It is a real-time idea.

Any great examples of content arbitrage for content marketing purposes out there?

Trader Image: Jefferies & Company
Network Image: Shutterstock / improvize

Comments

[Adrian Childers]

Hey David!

When I think content arbitrage I think being able to place an ad online for say $2/click and consistently sell a product that costs $3.

I'm also trying to create premium content on my site that I can sell so it makes sense to advertise on search engines and other sites. This way I can make money from my blog and build an audience at the same time. Takes a long time but I'm working on it.

Enjoyed the post!

[Louis Gudema]

Interesting post, David (as usual). Nice phrase, "content arbitrage".

Of course, different "markets" can be at very different places. It may be hard to post something that would be new to you, since you're so tied into online news, trends, etc., but for many people who are not online all the time even news that's a few days old may be new/important. I post items to LinkedIn and Twitter 4 or 5 times a day, typically, and by doing so am recognized by many of the people that I'm connected with on LinkedIn, especially, as a go-to online marketing and leadgen expert. Not all of those are breaking news, but cumulatively they've had the effect of building my brand.

Louis Gudema
Vice President of Business Development
Overdrive Interactive

[David Meerman Scott]

Adrian - Good example with pay per click.

Hi Louis - yes, I am online a lot. But for many markets (think veterinarians for example), there are many opportunities because few vets are creating content as a way to market their business.

[Edwin Dearborn]

This is a new term for me, so thank you for opening that door. I see another application of this technique which I feel expands the possibilities. One has to look outside their industry to find the connection back to theirs. For instance, a church may not be interested in government statistics on drug abuse, yet this is a moral crisis that could be utilized to feature their detox program. One can directly look into one' industry, but I believe that online marketers will learn how to " arbitrage outside the box."

[GriotApparel]

We re-tweet links to articles on art and international affairs at Griot Apparel, which is also what our tee-shirts are about.

The idea is to inform people who like one subject about goings on in the other field. So artists learn more about international affairs, and vice versa.

Thanks for the great piece David! Makes us think content arb is built into our DNA as a company.

[David Meerman Scott]

Edwin - Exactly. Great example. Consider what's happening in the wider news and apply to your organization.

Griot - Yes. Rather than talk about the shirts, you talk about the art. Thanks!

[Kevin McCormick]

David, I engaged in content arbitrage without realizing that's what I was doing. Recently here in Detroit, a well-known newspaper publisher passed away. A friend of his family expressed their grief on Facebook when I happened to be on. I confirmed with her and then tweeted that info out. One of the local newspapers and one of the local TV stations both ran breaking news feeds with the information gained from my tweet. What a rush! I have always felt like I was a "seeker" of information that others may not have access to so that I can then share that with others, I just never had a name for it. Now I do. Thanks again for an awesome post!

Kevin McCormick
Alchemedia Creative
www.alchemediacreative.com

[David Meerman Scott]

Kevin - that's great. Did you get credit in the resulting stories?

[Kevin McCormick]

David - The newspaper gave me credit. The TV station didn't and things were moving so fast with them, I got flustered and forgot to ask for it. Lesson learned!

[Rich Hohne]

David. Nice post. First, are you using RSS as your main source of info? Secondly, it seems like an important thing to remember is to add something of an original thought. Introduce the link or article clip with something of your own. If you could link to past content on your site, even better. Shows you don't just share, but share with some thoughtfulness.

[The Money In Your Mind]

That's a clever tactic but you should be aware not to fall in content duplication.

[Jim Campbell]

If content is king then must make real time content God-like...

[David Meerman Scott]

Jim - cosmic!

[important property rights]

Hi David, thanks for sharing this Content arbitrage article. I've been practicing arbitrage for about couple of months now and i can say all is good at this moment. Looking forward for more arbitrage post! Cheers!