Why small brokerages should appeal to the long tail of traders  

Adinah Brown

“As internet companies have been able to significantly drop the cost of production and distribution, there is less of a need to lump products and consumers into a one-size-fits-all “package” – Adinah Brown, Leverate

The Future of the current retail FX & CFD brokerage model

With an ever increasing array of competitors, tightening regulations and ever thinning spreads, the competitive challenges faced by small brokerages can seem stacked against them. While these circumstances seem to advantage the larger and more established brokerages who have the resources available to adjust their offerings, these changes don’t necessarily have to entail the end of the small broker.

The solution may actually be found in the source of their perceived weakness. A small brokerage has the freedom to be more versatile, and able to venture into where no one else is going.  The solution may be found in the long tail.

What is the long tail?

The long tail is a term that was first coined by Chris Anderson, who in October 2004 of Wired magazine wished to define the notion of moving away from the high number of “hits” that represents the bulk of demand and instead move towards the huge number of “niches” in the tail.

As internet companies have been able to significantly drop the cost of production and distribution, there is less of a need to lump products and consumers into a one-size-fits-all “package”. So, to take an example, your local book shop is going to stock all the popular favorites that they know will be of interest to a wide range of people.

That way they know that all Harry Potter and Hunger Games fans out there will be kept happy. However due to more onerous operational costs and limited space available, your local bookshop is far less likely to stock books about the evolution of the T class diesel locomotive in Mozambique, for the obvious reasons.

However while there is no chance that you would consider cracking this book open, believe it or not, there are some who would, I know because they tend to be relatives of mine – and these people represent the long tail.

The Forex Long Tail

So, this begs the question of how is the long tail concept applied to your forex brokerage?

A benefit to a small brokerage operation, over the big firms in the industry, is that you have the means to provide more personalized and specialized financial offerings, that will allow you to stand out from amongst your competitors.

You have the time available to foster strong relationships of trust with your clients and prove yourself able and willing to go the extra mile, where your competitors wouldn’t. Furthermore, with a more thin lined operation you also have the means to be more agile as you adapt to changing economic environments.

Implementing the Long Tail in online marketing

The finance industry,has one of the highest rates of PPC marketing, which shouldn’t come at much of a surprise when you consider that marketing funnels conducively lead to online trading platforms.

Still, while the big dogs are putting in the most obvious and direct keyword phrases such as “forex”,”trading” and “ broker”, as a small brokerage your best strategy is to find the niche that you are most equipped to tap into and focus on when you identify specific keywords for your PPC bids. The key is to identify and offer fairly unusual instruments or currencies, that are unlikely to suffer from too much volatility.

You might want to choose keywords such as “Bitcoin”, the index of your local region or an area of specialisation (foe example, the A500, Apple or the TASE). By placing your bids on these more unusual keywords, you give yourself a much stronger chance of being ranked close to the top.

Likewise, make sure that you include these keywords in the actual text of your landing pages and continue to invest in the value of your Landing Page Quality Score, so that your page performs well in organic SEO search results.

Towards this end choose more descriptive phrases such as “most trustworthy forex trading broker” or “responsive trading platform”, as these phrases are more likely to perform well when connected to the specialization of your business.

Undoubtedly the challenges faced by your small brokerage are high, but under the current financial trading climate, the key is in recognizing your potential niche in being able to offer a great deal less of more.




 

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