The Importance of Information Arbitrage

In the race for growing revenue, change is inevitable. Businesses that accept this understanding and more importantly, adapt to change, will be more successful. Many businesses and marketing professionals agree with this, but interestingly, many fail to act on it. Why? Because they fail to value input from sources they are unfamiliar with. Look at the rise of social media as an example. Despite the massive attention social apps such as Instagram and Facebook have, companies still view them with trepidation when it comes to marketing budget and gravitate to traditional TV or banner ad strategies. Rather than viewing social media as leverage point, it’s viewed as a disruption to an existing marketing plan that has worked in the past. The reality is, the internet didn’t change anything. It just accelerated something that has always been going on, Information Arbitrage. 

Information arbitrage is the process of creating market opportunities by identifying trends and acting on them. Advancements in marketing, including technology advancements usually serve to advance the goal of growing revenue, not introducing competition. Consider the Netflix story. This company started as a mail order service delivering DVD movies. Rather than ignoring a growing broadband infrastructure, they shifted to a streaming rental service. Later, they took it a step further by developing their own movie and show content. Compare this with the Blockbuster story. The trend away from brick and mortar movie rental store fronts was never seriously considered until it was too late. 

Today, information arbitrage is widely in use. Big data analytics is big business because it identifies trends and helps marketing professionals hone in on pockets of likely success. The goal is to identify trends or predict where people’s attention is going to be before the rest of the industry realizes it. The content being developed must also hit on these trends and be pushed out to consumers on a consistent basis to maintain attention and credibility. While video may be the most effective medium for content, it’s worth realizing it was not always this way. YouTube is only 11 years old! How would you react if I told you virtual reality is the next big social media distribution channel based on trending data? Would you adapt to it and start thinking about how your business can create virtual reality content to reach new audiences, or would you fail to act until it’s too late?