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Posted by Sonne Taylor on

It’s All About Arbitrage.

The OG NYSE Opening Bell

Being a media buyer or planner is a little bit different than most advertising. A lot of people are dreaming up experiential or innovative ideas, but I’m just worried about one thing.

Arbitrage.

What is arbitrage though? Truthfully, it’s a word more at home on Wall St. than Madison Ave, but as advertisers become more and more metrics driven it’s slowly entering the vernacular. In the world of securities and commodities, it essentially means that it’s taking advantage of price differentials in different markets and exploiting them for short term gain. An example would be if I was selling gum for $1 a pack and someone 2 blocks away was selling them for $3 a pack. You would buy my gum and sell it 2 blocks away making money on the “arbitrage”.

Now when this comes to advertising this is incredibly interesting. There’s tens of thousands of different media products sold by millions of different publishers. While most aren’t perfectly transferable, many are on some level. Utilizing things like MMM (Market Media Mix, which is a multivariate regression analysis of your media buys) you can being to put together patterns of what media properties, on average, have what impact on your sales and assign dollar value to them.

Now from the perspective of media planning and buying this is a unique chance to set ourselves apart. If we can utilize analytics and past performance data, we can identify opportunities for clients and help them make more money than the average. For instance, if a $1000 a month billboard in Breckenridge is as effective as $2000 a month in Facebook ads, it only make sense to buy the billboard. What gets really interesting, is when you measure the various combinations of these tactics in congress. At the end of the day, my job looks a lot more like hedge fund manager than marketer, but the future looks more like a combination of stock broker + artist rather than one general “marketer”.

It’s All About Arbitrage. was originally published in Multimedia Marketing.