subject: Why Online Marketing Follows Laws Of Economics, And How You Can Use This To Your Advantage [print this page] If there was ever an market that most closely resembles the 'perfect competition' described by many economists; it's online marketing.
Perfect Competition is a state of play, where no market participants have a large advantage over others. Where anyone can join the market and become a competitor. In this sense, the world of online marketing; where any average joe can suddenly setup a blog and adsense or clickbank account, fits very nicely in the picture.
There are some differences however that don't make online marketing a 'perfect market'. These exist in the fact that many players are able to draw huge (abnormal) profits from the market place. These market leaders, sitting in a comfortable leadership position with good connections, large email lists and a fat bank account - certainly have an advantage over everyone else.
In that sense, the online marketing leaders (shoemoney and jon chow come to mind) actually highlight that online marketing is actually an imperfect market, i.e. one where market distortions result in an increase in wealth for some participants.
Here's how you can use these laws of economics to benefit how much you gain from online marketing:
Create a brand. In a world where all competitors are equal, there are no brand loyalties. In reality, the reason why major market players are so few (e.g. car makers) is because brand helps retain customers.
A good brand actually protects your online business from new entrants, that may have better, newer or cheaper products than you are offering. In this way, investment into your brand is like purchasing insurance. The fact that 'trust' pays such a crucial part in the decision making of online buyers, means that brand plays an even greater role in online marketing than it does in brick-and-mortar shops.
What this means is; online blogs and affiliate sites that have no brand whatsoever stands a disproportionately large chance of visitors simply deciding that it simply isn't worth the risk, and eventually leaving the website. On the other hand, bloggers that clearly have a large following, and have a good leadership position, such as shoemoney, will not only see an increase in conversions due to trust, but will also poach prospective buyers from other websites (through the individual 'googling' to research the product, and ending up on the authority bloggers website, where they eventually click through to the vendor's page')
I hope that you can see the clear connection now between online marketing and the laws of economics and perfect/imperfect competition, and use this to your advantage to become one of the market participants earning 'abnormal returns' like the gurus you desperately would like to emulate!
