The real first-mover advantage

There is a first-mover advantage. But it’s not what everyone thinks. It isn’t being the first product in a market. It’s being the first in a new distribution channel.

I was reminded of this by a recent blog post by Andrew Chen positing that “over time, all marketing strategies result in shitty clickthrough rates.” It’s true, but the flip side is that if you can find a new viable channel, you can exploit it with very high efficiency.

In 1993, the first topic pages and fan pages on the Web attracted disproportionate amounts of attention; Eric Lippert recounts how his Lord of the Rings fan page made him an “expert”. In 2003,  Amazon was able to drive traffic through Google AdWords even though in the beginning it was bidding only the minimum 5 cents a click on every keyword. In 2008, when the iPhone App Store launched, indie developers were able to get top-10 positions with little to no marketing, like Shane Vitarana did with Drum Kit. Today in 2012, all of these channels are quite saturated and fiercely competitive.

Or, as Andrew wrote in a different context:

Getting an “invite” was a big deal in 2003, so addressbook importers were super effective. Banner ads used to get 10% clickthrough rates, and now they’re 0.1%. Over time, marketing channels naturally become saturated and that creates a built-in defense against new entrants in the market. … A corollary to this is that if you discover a new marketing channel or some new viral mechanics, you’ll have a huge advantage early on since your response rates will be great.

When it comes to distribution tactics, don’t fight the last war.

10 Comments

  1. Andrew Chen says:

    funny, this was actually the original title and topic of the blog post but I changed it halfway through. I was going to call it “First mover advantage for quants” (your title is better) but decided that it was mixing too many ideas together into one post. Nice job sussing out the main point :)

    • Ha! Here’s what else is funny: I had a draft of this post sitting around for a long time. Then when I saw your post, I decided to dig it up and finish it. When I did, I found that the draft already had a quote from an earlier post of yours. So you got two links/quotes from me in one post. Clearly we have both been thinking about a lot of the same things.

  2. That’s why people are in a frenzy over Pinterest I suppose, but it’s tough when the new hip distribution channels have a narrow demographic user base.  Like Pinterest is all Moms right? I work with Apptopia, first marketplace to transfer mobile app ownership.  I can only hope that years down the line people will wish they had listed their mobile app on our site to be acquired sooner. You just made me feel almighty powerful knowing I have access to who gets featured on our homepage. Haha Ah super powers. Who knew.  :)

  3. […] of a particular platform tends to decrease over time as more companies leverage them. Being the first to implement a novel strategy in a new channel can represent a huge competitive […]

  4. […] sẽ giảm đi khi các công ty khác cũng tham gia ngày một nhiều. Vì thế nên việc trở thành công ty đầu tiên tận dụng được các tính năng của platform mới sẽ đem lại một lợi thế vô […]

  5. […] They will have an intimate knowledge of the product, the market, and strategy with a foundation built on data. Effective marketing has always been hypothesis driven, and this modern take is no different. Growth hacking simply has an additional time pressure due to the channel race. […]

  6. […] An excellent blogpost that resonates: The real first-mover advantage. […]

  7. […] on Jason Crawford’s the real first mover advantage blog […]

  8. […] converse of this law is that if you are first-to-market, or just as well, first-to-marketing-channel, you can get strong clickthrough and conversion rates because of novelty and lack of competition. […]

  9. Daniel Cardona says:

    Even though this was 5 years ago it still applies for every type of company or service, nevertheless, I do find hard to become the first in the proper channel. How do you know for sure its going to sucess?

Leave a Reply

You must be logged in to post a comment.