The real first-mover advantage

April 9, 2012 · 1 min read

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.

These days I do most of my writing at The Roots of Progress. If you liked this essay, check out my other work there.


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