Welcome back fellow investopreneurs!

Arbitrage in paid acquisition isn’t dead—it’s just hiding in plain sight. If you’re willing to roll up your sleeves this weekend, you can uncover some seriously undervalued opportunities. Here’s how you can dig in and start finding deals that work for both you and creators who are still learning the true value of their audience.

A Few Quick Definitions

Arbitrage
Arbitrage is the practice of capitalizing on price differences between two or more markets. Essentially, it involves buying low in one place and selling high in another, thereby pocketing the difference as profit. In marketing and paid acquisition, arbitrage means discovering undervalued channels or opportunities—such as underpriced creators or ad spaces—that allow you to spend less while gaining more value, ultimately boosting your overall returns.

Customer Acquisition Cost (CAC)
Customer Acquisition Cost (CAC) is the total expense incurred to acquire a new customer. This figure is calculated by summing all marketing, advertising, and sales costs over a given period and then dividing by the number of new customers gained during that time. When looking to create arbitrage opportunities in customer acquisition, key factors to consider include:

• Channel Efficiency: Ensure the CAC in each channel is significantly lower than the customer's lifetime value (LTV).

• Conversion Funnel Performance: Assess how effectively potential customers move from initial interest to conversion.

• Lifetime Value (LTV): Compare CAC against the LTV to confirm that acquisition efforts are cost-effective.

• Channel Scalability: Determine whether the channel can grow without a corresponding surge in CAC.

• Market Conditions: Identify underpriced opportunities in less competitive or underappreciated channels.

Ideal Customer Profile (ICP)
An Ideal Customer Profile (ICP) is a detailed description of the type of customer who would benefit most from your product or service and deliver the highest value to your business. This profile typically includes key characteristics such as industry, company size, demographics, behaviors, pain points, and purchasing power. Clearly defining your ICP helps you concentrate your marketing, sales, and product development efforts on customers most likely to drive sustainable growth and long-term success.

Step 1: Start with a Solid List

First things first: create a list of 100 newsletters, YouTube channels, and social influencers that speak directly to your target audience. This isn’t just about numbers; it’s about finding creators who are genuinely connected with people who could benefit from what you offer.

Take your time to research. Think about the voices you trust, the ones that have already built a community around a similar interest. These creators aren’t just content providers—they’re relationship builders who have the ear of your future customers.

Step 2: Use AI to Streamline Your Outreach

Once you have your list, it’s time to reach out. Here’s where technology becomes your best friend. With AI, you can quickly whip up personalized outreach messages that are both engaging and efficient.

• The Pitch: Ask each creator, “How much for a sponsorship bundle of X placements?” (Tip: pick a number higher than two—it adds a sense of value and commitment.)

• Aligning Interests: Propose a deal that mixes a fixed fee with a percentage of backside revenue. Typically, this means 20% to 50% of the upside, depending on your margins. This way, you’re both in it together—if they succeed, you both win.

This approach isn’t just efficient; it’s smart. It uses modern tools to cut through the noise while still keeping the human touch.

Step 3: Analyze, Adjust, and Act

After your outreach, the next step is to see what the responses tell you. Gather all the replies in a Google Sheet or your favorite CRM tool. Then, use AI to help identify which creators might be underpricing their audience. If tech isn’t your thing, you can always review the responses manually. Look for creators who might not fully appreciate the worth of their audience—and that’s your sweet spot.

The goal here is to focus on the underpriced creators who haven’t yet realized their full potential. By connecting with them, you’re setting the stage for a win-win: you get a great deal on reaching your audience, and they get a chance to monetize their influence more effectively.

Structuring the Deal for Success

It’s essential to structure your deals in a way that minimizes risk and rewards success. Here’s a framework you can adapt:

• Test the Waters: Start with a pilot campaign. For example, you might set an initial budget of $___ for a test run. If the campaign performs well, you can roll out subsequent phases with larger budgets (say, $) plus an extra incentive (like $) to keep everyone motivated.

• Protect Your Investment: Always include an opt-out clause. If the campaign underperforms, you need the flexibility to pull back without burning through your budget.

Remember, the key is to know your own metrics. A deal that’s a bargain for someone else might be too expensive for your business if it doesn’t hit the right performance benchmarks.

Wrapping It Up

The idea here is simple: in less than two weeks, you can go from a creative brainstorming session to a full-fledged acquisition campaign that’s based on smart bets. This isn’t about spending more—it’s about spending smarter by finding those under-the-radar opportunities that others have overlooked.

Next weekend, instead of scrolling aimlessly online, dive into this experiment. Find those hidden gems among creators who might not yet fully understand their own value, and cut deals that can really move the needle for your business. Not only will you potentially unlock a new, effective channel for paid acquisition, but you’ll also be fostering relationships with creators who can grow alongside you.

So, what do you say? Ready to uncover some hidden potential and turn underpriced opportunities into your next big win?

Happy hunting, and here’s to a weekend of smart, strategic moves in paid acquisition!

Here's a quick, fill-in-the-blank worksheet to guide you through the arbitrage in paid acquisition exercise. Use this as a step-by-step template to organize your strategy and track your progress:

Arbitrage in Paid Acquisition Worksheet

1. Define Your Ideal Customer Profile (ICP)

Purpose: Identify the customers who benefit most from your offering.

• Industry: __________________________________________

• Company Size: _____________________________________

• Demographics/Location: ____________________________

• Pain Points/Needs: _________________________________

• Purchasing Power/Behavior: ________________________

2. Calculate Your Customer Acquisition Cost (CAC)

Purpose: Understand your current spending to evaluate potential arbitrage opportunities.

• Total Marketing/Advertising/Sales Expenses (Period): $_____________

• Number of New Customers Acquired (Period): _______________

• CAC (Expenses ÷ New Customers): $_____________

Notes: Consider how this figure compares with your customer's Lifetime Value (LTV).

3. Identify Underpriced Acquisition Channels

Purpose: Build a list of potential channels where arbitrage might be possible.

• Task: List 100 potential channels (newsletters, YouTube channels, social influencers, etc.) that speak to your ICP.

• Tool: Use a spreadsheet or CRM to compile your list.

• Sample Entry:

  • Channel Name: __________________________________

  • Type (e.g., newsletter, YouTube, influencer): __________________

  • Audience Size: _________________________________

  • Engagement Metrics: ___________________________

  • Initial Impressions/Notes: ________________________

4. Craft Your Outreach Strategy Using AI

Purpose: Develop personalized pitches to engage with the selected channels quickly.

• Pitch Framework:

  • Ask: “How much for a sponsorship bundle of ____ placements?” (Use a number greater than 2 to add value.)

  • Propose: A deal with a fixed fee plus a % of backside revenue (choose a percentage between 20%-50%, based on your margins).

• Your Draft Message:

Space to refine your message with notes:

5. Gather & Analyze Responses

Purpose: Identify which channels are undervaluing their audience and have potential for a win-win deal.

• Step 1: Collect all responses in your spreadsheet/CRM.

• Step 2: Create columns for:

  • Channel Name

  • Quoted Price for Sponsorship Bundle

  • Proposed Revenue Share

  • Notes on Engagement/Potential

• Step 3: Use AI or manual review to flag channels with lower-than-expected pricing or those that seem unaware of their true audience value.

• Notes/Observations:

6. Structure and Test Your Deal

Purpose: Set up a pilot campaign that minimizes risk while testing performance.

• Initial Campaign Budget: $_____________

• Performance Benchmarks: (e.g., conversion rate, engagement level)

  • Conversion Rate Target: __________________

  • Engagement Level Target: __________________

• Rollout Plan:

  • If the pilot performs well, scale up with a budget of $_____________ for subsequent phases.

  • Consider adding an extra incentive of $_____________ to align interests further.

• Opt-Out Clause:

  • Conditions for discontinuation if underperformance is observed: ________________________________

7. Review and Reflect

Purpose: Ensure your metrics and targets align with your overall business goals.

• Key Performance Metrics to Monitor:

  • Overall CAC vs. LTV: ______________________________

  • Channel-specific performance: ________________________

  • ROI from each partnership: _____________________________

• Next Steps:

  • What adjustments might be needed? ___________________________________

  • How will you scale successful channels? ________________________________

Use this worksheet as a living document—update it as you gather data, receive responses, and refine your strategy. It’s designed to keep you focused, organized, and proactive in spotting and exploiting arbitrage opportunities in your customer acquisition efforts.

Happy hunting!