Sometimes, the winner really does take the most of it.
We’re all somewhat familiar with the benefits of finishing first, but we rarely acknowledge how devastating it can be to finish second. Growing up, a hockey coach of mine often reminded us that, “Second place is the first looser.” Tough love, I guess.
In the 2016 Wimbledon Championships, the male and female singles winners collected £2,000,000 in prize money. The runner-ups? They received half of that — £1,000,000. That’s a lot of money, but still only half of what the winners got. This is how the prize money was distributed for the Wimbledon Championship in 2016:
The singles winners also collected 2,000 valuable championship points, whereas the male runner-up collected 1,200 points and the female runner-up 1,300 points. And in addition to prize money and points, there’s the massive publicity boost that comes from of winning the Wimbledon tournament, too. Including the effects on sponsorships and fanbase growth. “To the victor go the spoils,” right?
In the case of Wimbledon, it would be unfair to claim that the male and female winners were twice as good as their finalist opponents. The winners had a slight edge in their respective matches, and that was enough for them to win. A slight edge might have massive effects; if the market favours “the no. 1 alternative”, being just 1% more successful might allow you to come out on top in 80-90% of the cases.
In other instances, it gets even worse for the “runner-up.” Many types of rewards are binary, like winning a new customer: If ten companies compete for a single customer, there will be nine 100% losers. No matter if a few of these companies lost with the smallest possible margin. The benefits of success are rarely evenly distributed; it’s the natural outcome of the power law distribution.
Still, the “winner-takes-all” is in no way a new concept in economics. David S. Evans and Richard Schmalensee, author of Matchmakers: The New Economics of Multisided Platforms, argue that such markets are less and less of a sure thing in today’s networked economy. We might regard Google, Facebook, and Twitter as clear market leaders if we think of them as a search engine, a social network, and a microblogging site. However, if we categorize them as online ad sellers, they’re not so apparently dominant1 The authors conclude:
“The message is simple: beware of the siren song of network effects, winner-takes-all, and first mover advantages. Network effects can create great value rapidly, but they can destroy it just as fast.”
However, in practice, the network economy still tends to reward winner-take-all.
As for inbound marketing and SEO for instance, the slight edge seem to be of major importance: If you manage to rank in Google, it matters that organic first-page results will collect 90% of all traffic. The first, second, and third organic search result will attract 61% of the clicks. And out of all the traffic, the number one organic search result will collect 33% of all traffic while the second organic search result will get near half — 17,6% (The First Page of Google by the Numbers):
As any social media natural will tell you, there are plenty of online tactics to take advantage of the slight edge. One instance is where you strive to build content skyscrapers (also known as the skyscraper technique) by barely adding just enough quality to push yourself onto the top position. Another tactic is to focus all content creation around a very specific content theme. (see also My DIY Content Marketing Experiment).
My advice to inbound marketers is simple:
Either you go after it (a top keyword rank, an interest group or segment, a target conversion rate etc.) and you make 100% sure to get it — or don’t even bother.