So you want to get involved with commodities trading, eh?

The commodities market has always been a great alternative to trading on the OTC stock market. What this article will discuss is trading physical commodities such as gold, diamonds and fuel products. The real focus will be acting as an intermediary or facilitator in physical commodities transactions. I mention the three products above because they are very heavily traded products with big upswings and downswings in price potentially yielding very good profit margins. Commodities are usually purchased with some kind of discount off a relative price index and can be resold for a lower discount or the same discount depending on the market price swing and the time between purchase and re-sell.

Breaking into the commodities world comes with varying degrees of risk depending on the angle you choose to enter the market. There will always be some risk involved and the greater risk, the more the payoff can be. The least you must be willing to risk is your time and the most being your money. Trading physical commodities typically costs millions of dollars per transaction but that does not mean you must have that much money sitting in a bank somewhere. However, you must be willing to leverage assets in order to obtain a financial instrument from, in some cases, a top prime bank.

As I mentioned, there are several approaches you can take to the commodities marketplace. Let’s talk about some of these approaches now.

  1. You can use your own money to buy and then re-sell commodities

Risk level: BIG

  • There are many things that can go wrong with a commodities transaction: Cargo lost due to disaster/theft/terrorists at sea/air, product did not truly exist/false documents, product held up at customs, etc.
  • Putting real money assets at risk in a commodities deal should only be considered when the buyer and seller have built a previous relationship completing transactions using safer methods
  • When using your own money, you maximize the profit potential by avoiding any fees that would be incurred by obtaining a financial instrument


  1. You can leverage your money and/or other assets to obtain a financial instrument in order to buy and re-sell the product.

Risk Level: Moderate

  • In order to successfully market the product to other buyers and for that matter to purchase the desired commodity in the first place, many buyers turn to commodities brokers
  • The broker takes a small percentage of the transaction on a one-time or ongoing basis
  • The risk comes in when buyers put their personal information in the hands of brokers who then distribute the information across the internet potentially into the hands of scammers who will use their information to try to obtain financial instruments or close other transactions using their names and/or information
  • Another common mistake is that buyers will post a financial instrument without seeing any proof of product and then the financial instrument will be used, or shall I say misused, by the seller by him/her presenting the financial instrument to a bank in order to get the necessary funding to actually buy the product in the first place
  • The above point is why it is imperative for a buyer to deal only with a provable title holder of a product and not someone looking to pull a fast one
  • A perceivable downside to this method is that the buyer will lose a percentage of the profit margin in obtaining the financial instrument. However, it is generally a much safer way to complete transactions as banks will not release the actual payment to the seller until there is a confirmation of Proof of Product by a third party inspection company such as SGS


  1. You can build relationships with buyers and sellers and take a small percentage of successful transactions.

Risk level: LOW

  • The only thing at risk here is time. Networking and relationship building skills are fundamental to the success of a commodities broker. Make new contacts, do what you are able to vet out those contacts and put them together with other connections to close a deal
  • If you are working with reliable/well known buyers and sellers, the chances of you actually getting paid your commissions on a transaction are very good although there is a chance that even though one of the buyers and sellers that you introduced successfully closed a transaction, you do not get paid
  • Most deals do not close, 95% of the deals you receive in your inbox are fake and many other brokers are so far away from an end buyer/seller, communication takes so long to happen and the deal is gone by the time things get going. This is why it takes most brokers quite some time to close their first deal
  • There are several “blacklists” that are distributed between brokers and available on the internet. These lists are created by other brokers who have been scammed or cheated out of their commissions or buyers and sellers that have been defrauded in a transaction. It never hurts to keep several blacklists on file and search them for new connections before doing any business with them
  • Avoid transactions that involve long chains of brokers or dealing with inexperienced brokers who demand outrageous percentages of commissions as these are the main causes for transactions to fail to close. If it cannot be avoided, try to get in touch with the broker who is next to the buyer/seller and arrange a conference call with your seller/buyer. Make sure you are present for the initial conference call so everyone knows you are involved in the deal

As you can see, every approach has its good points and bad points. Breaking into the commodities markets is difficult no matter what approach you use. There are new buyers out there every day trying to purchase various commodities without success. Even successful commodities traders trying to break into new markets have trouble. While trying your hand at being a broker may sound easy and rewarding, it is anything but. You must spend time everyday making new contacts and trying to put the two sides of a transaction together in most cases without any reward for your hard work as most deals do not close for one reason or another. Many brokers spend years trying to close out a transaction only to finally give up and walk away from the business altogether. This is the worst mistake you can make as a broker. After years of networking do you really want to throw away all the connections you made? Of course you don’t! So keep at it and eventually you will get something in. There is no magic bullet for success in the commodities world, but with diligence, perseverance and integrity, you are doing your best to be successful.

A few suggests to make yourself more presentable as a broker

  • Start your own company and get a branded email address that matches your company. Not only will it be cheaper for you to take in commissions into a corporate bank account, it looks much more professional sending out emails from an actual corporate email as opposed to a publicly available email provider such as a yahoo or gmail account
  • Avoid deals that involve long chains of brokers altogether as they almost never close and will likely just end up wasting your time that could be better spent on more viable business
  • Get as close to the end buyer/end seller as you can in any transaction
  • Make sure to send out documents to their intended recipient immediately and without delay before someone else beats you to the punch
  • Never alter documents from an end buyer/seller/mandate without their permission as it is illegal
  • Sign any NCNDA/IMFPA that a broker requests you to sign if it moves along the transaction. More on this later
  • Get permission from your buyer/seller to send out their name and company name so that the person on the other side of the transaction can address appropriate documents to them in a timely manner
  • Vet out your offers before sending them on to your end buyer/seller or even to other brokers for that matter. If you see red flags in the offer try to address them and if they can’t be addressed DO NOT send them to anyone else
  • When sending out offers to end buyer/sellers, put as much information as possible in the initial message with a summary in the subject. For example, a sample subject heading for a gold transaction could be:

AU 200MT with R&E  /  disc 5/4%  /  FOB Switzerland TTM at UBS  L2L  /  2 brokers

  • ALWAYS find out the number of brokers involved with the transaction BEFORE sending the offer out and tell this to the end buyer/seller



Non-Circumvent Non-Disclosure Agreements and Irrevocable Master Fee Protection Agreements

These documents are a constant cause of arguments between brokers and quite often are the main cause for a transaction to fail. It is a terrible shame that most brokers do not understand that without being attached to a contract with a contract number, these documents are meaningless, non-binding and not enforceable in any way shape or form. Many brokers will tout their standard ICC 400/500/600 NCNDA/IMFPA as a fool proof way of getting paid on a transaction or any transaction that any party involved does for the life of the agreement. This could not be further from the truth.

If you actually do successfully get paid on a transaction this will only allow you to get paid on further transactions between end buyer and end seller involved with the specific commodity involved in the transaction. If you close a gold deal with a buyer and seller and then those parties decide to trade fuel products, you will not be entitled to get any commissions.

When a buyer and seller sit down at a Table Top Meeting to close a transaction, they have every right to throw the IMFPA in the trash and not pay any commissions on the deal. This does happen to the discontent of many a broker. This is why it is important to build relationships with people that have integrity. Talk to the people you want to close the transaction with. If you cannot get a feel for what kind of person they are or they won’t even have a phone conversation with you, there may be something wrong with the relationship in the first place.

More often than not a buyer or seller will not sign someone else’s NCNDA/IMFPA so getting a request to do so is a red flag. If it is insisted that this document be issued then have your end buyer/seller issue one and sign it before you send it down the chain.

A very common practice you will see from brokers is they will put themselves first on an IMFPA with a large portion of the commissions designated for themselves when you are the one who is actually next to and have developed a relationship with the buyer! When it comes down to closing a transaction, the buyer/seller decides who gets paid what on their side of the commission payouts.

Contrary to popular belief, brokers cannot decide what they get paid in any transaction. Commissions should be split evenly on each side between everyone involved. Usually there is a buyer/seller mandate involved who will be appointed a large portion of the commissions on that side. Again, it is the buyer who decides this portion and NOT any broker involved. In reality, the mandates do not actually receive the full amount they are appointed. The majority of the discount appointed for mandates gets added on to whatever side they are on and go to the buyer or seller, not the mandate.


In conclusion, I would like to wish everyone involved in the commodities world the best of luck. Be persistent, be honest, be humble, be professional and you will close your first deal. The first of many to come.

Stop chasing the dream and educate yourself

In this business you are your own worst enemy. If you want to be successful in the fuel business, you need to put your ego aside and be as transparent as you can. If you don’t believe in the end user that you happen to be close to, even if you are not so close which is usually the case, walk away. Find a new relationship. Search. Google. Read. Do your research. Be familiar with the products and the prices of those products you want to be involved with and the way the deals are closed.

What are the actual procedures that actual buyers and sellers use to close deals?

This is the most important piece of information you need if you want to close deals. Know your buyers and sellers and exactly how they want to transact. Know what kinds of procedures will work and what will never work. Some procedures are workable but will not work for every buyer. Some buyers have completely unreasonable procedures that will never work for any seller. Some sellers, or more often re-sellers, will have requirements that no buyer will accommodate. If you don’t know what works and what is impossible, you will spin your wheels and no matter how much spaghetti you throw against the wall none of it will stick.


The reality is, dip and pay deals are not something you will ever close. These deals come about when an end user takes title and has fuel delivered with a buyer already lined up and for whatever reason the buyer pulls out. Now the title holder has the fuel sitting in tanks somewhere and is paying outrageous storage fees to keep it there. In desperation, they unload the fuel sometimes at a loss. Usually large entities such as fuel companies and airports buy these products through their own trading desks and no brokers get paid on the deal even if they are in some way involved. Traders use all kinds of tricks to circumvent brokers and take all the commissions for themselves with no chance of repercussions and no recourse options available to those excluded. One trick they will use is to setup a shell company for the sole purpose of the transaction. After the transaction is completed, they close down the company. There are many other tricks of the trade they know and you don’t.

Bottom line, don’t even bother. Unless you have a close relationship with those involved with the transaction and truly trust everyone involved, chances are you will not see a dime. By the way, having a close relationship with someone does not mean someone you met on the internet.


If a buyer really wants to buy fuel he should no problem showing that he has the funds to do so. If he can’t show the funds for the first lift, he doesn’t have the funds. Most so called end buyers are actually resellers. Someone that has an actual buyer lined up and will immediately resell at a lower discount. They will have to have POP documents in order to activate their credit lines but do not have the liquid assets to buy the product.

What about prices?

Up to date prices for refined fuel products are not easy to come by. Do some Googleing for yourself and you will not find an easily displayed chart of NWE Platts prices anywhere. You could pay to have these prices directly from Platts, but the upkeep of keeping yourself up to date in this way is prohibitively expensive. You should at least have a general idea of what discounts are reasonable for the type of transaction you are dealing with. Different kinds of sellers will have various discounts that go along with their procedures.

Dealing with refineries

Refineries from all over the world offer production allocations at very attractive discounts. There are a few challenges when entering into a deal in which there is a refinery involved. One aspect that is not very attractive to any end buyer is time. Production contracts take time to deliver the first lift and most buyers cannot have their credit lines open long enough to take delivery. Another challenge will be procedures. Generally, a refinery will require some kind of POF up front to ensure they are getting paid and to securitize the transaction. This is a problem for most buyers who are in fact resellers.

The way forward

As I said, if you want to be successful, be transparent. Whether you are close to the buy side or close to the sell side, you need to communicate clearly with the other side about your requirements from the start. Hopefully, the people you are dealing with are at least as knowledgeable as you and know how their end user wants to do business as well. If you see there is no way forward right from the start, walk away. On to the next. Don’t waste your time, don’t waste other people’s time.

Leave your ego at the door. You don’t need to try to tell people how you think this business works. They don’t want to hear it. If you don’t see a mutually agreeable way forward, thank the person for their time, wish them luck and be on your way.

Reputation: Your most important asset

If you have been following this blog or my posts on LinkedIn, you know I am a big advocate for educating my fellow intermediary. The better prepared we all are, the more likely we all are of being successful. Current trade techniques and regulations as well as the proper etiquette that we should engage in when dealing with not only buyers and sellers but other intermediaries, are all important areas that we as intermediaries in the commodities industry should keep ourselves educated on. If you do not come off as a professional, knowledgeable and experienced industry representative, you are endangering not only your ability to close deals, but your very reputation in this business.

I shouldn’t have to tell you that in any business, reputation is everything. That especially applies when you are dealing with people that potentially have or have access to millions and in some cases billions of dollars in cash and/or assets. You may have already been involved in a transaction that has failed because of the bad reputation of someone involved in the transaction. I have seen this numerous times. A buyer or seller sees the NCNDA signed by all the brokers involved and immediately cancels the transaction because he/she sees someone on there with a shoddy reputation. Utilizing the techniques that I speak about in this and previous posts will be a good start to maintaining a good reputation amongst all the relationships you create and maintain within this industry.

The front line of your reputation: Your web address

Networking has changed dramatically in the digital age. Before social media and the internet became the most effective way to market your business and yourself, you could say things were a lot simpler. You hit the streets. You went to social clubs and industry networking events to chat up potential customers, other industry professionals and other potential business assets to grow your business and your network. One of the most important tools of these days was the business card. Handing out business cards remains to this day a great way to market yourself and present yourself as a professional.

Since the digital revolution, having a website is the business card for the new age business owner or industry representative. Another part of having your own website is having a personalized email address. I have mentioned this both on this blog and on many postings and private emails to other intermediaries that having an email account with a public domain such as gmail or yahoo mail makes you look inexperienced right off the bat. On the flip side of the coin, having a personalized, relevant email address is key to developing a rapport with other intermediaries and especially the end buyers and end sellers or mandates that you start relationships with. Your email address is the first thing everyone looks at when they receive a message from you. The last thing they should be looking at when reading a message from you should be a personalized signature which contains contact information including a website address. Even a one page splashpage that has basic information about what you do or what products you specialize in well help your reputation immensely amongst other professionals.

Getting the help you need, now

If you have seen my posts before you know I am not saying anything new. I have been giving this advice for quite some time now. Yet, the majority of the email addresses I see people using still seem to be from public email domains. You want people to take you seriously, get a website, get an email address.

I see that the biggest challenge for people reading this is simply finding the time and motivation to get this done on their own. The prospect of building a website could seem like a daunting one for someone who has little to no experience with web design and development. Well, I have decided to take my advice a step further and offer everyone some easy tips and techniques on how to build your own website and get your own branded email address.

I have decided that there is such a need from all the people in this business to have this service that I am offering this for free. Yes, absolutely, completely and truly free. I will show you how to not only create your own unique webpage and branded email address, I will show you how to generate traffic to your website yourself using proven Search Engine Optimization techniques. At the very least you will be on your way to building a better rapport with all the relationships you have, current and future.

Not only am I going to show you how to do all this yourself, I am offering free support. If you have questions or problems while you are getting everything up and running, just ask me and I will help you through it, every step of the way.

Free advice, free support. What you need. Now.

Contact me today.


Possibly the most important key on the ring: Humility

A few weeks ago, I was on a skype call with an associate of mine discussing African gold deals. In a nutshell he was telling me that I have to get one of my African contacts to travel with gold to his refinery without issuing a financial instrument and without paying any transportation cost whatsoever. While this might seem like a reasonable way of doing business I am here to tell you that it is not. For any commodity transaction, you receive an offer or a draft contract and it states where the commodity is located. That means the buyer has to go and get it. If it is a CIF transaction then the buyer has to proof up. No one is going to risk not being paid for their goods.

In any case, my associate could not see the light of reason no matter how many times I explain it to him that it is at best extremely difficult to find someone in any part of the world that will do business like this with their goods. Especially if the goods in question are extremely valuable like gold happens to be. His eventual response was that I didn’t know what I was talking about and that he now knows more than I do about the gold business even though he has spent less time working on gold deals; never having closed a single one might I add.

This brings me to the main point of the article. My response to this was simple and dismissive. I will not get into a pissing contest with another broker it is just a waste of time. I have stated this in other articles, if you want to be in this business then plan on being in it for the long haul. It may take you years to develop the right contacts on both sides of a deal to get one to actually close. You will not maintain nor create new relationships if you go into a conversation thinking that you know more about anything than anyone.

I have seen deals go right to the brink of closing and fail because of this. Buyer and Seller mandate on a conference call and someone sets the other one off because of an off comment and then hangs up the phone. Deal dead.

I will say that it’s mostly the brokers who have this holier-than-thou mentality. I have seen broker chains 12 brokers long and someone in the middle says he has to have .5% or he will not pass on the documents to the next broker. Deal dead.

I have had the same experiences with short broker chains where there is only 1 or 2 other brokers before the seller. I have even had these kinds of disagreements with a seller mandate who had to get paid on the buyer side. Deal dead.

Needless to say, most disagreements are about commissions.

If you want to close a deal in this business you have to be easy. You have to work at it too. You have to do everything in your power to get everyone else involved to be easy too. There is no reason to squabble about commissions or whose paymaster is going to be used or whose name is on the top of the LOI or any other aspect of any of these deals.

Push the docs through when they come in, split the commissions evenly, don’t pretend to be or act like something you are not and don’t claim that you are more knowledgeable or more experienced even if you are and maybe, just maybe, you will be on your way playing this game effectively.

Another key on your key ring for success: Due Diligence

If you are a broker, the first thing that might come to mind when you hear the term Due Diligence or DD for short, is a process that a buyer and seller go through to check up on each other and verify the existence of their prospective products or funds before a transaction goes through. While this does happen in most transactions, as brokers there is a certain amount of DD you need to be doing on every deal that winds up in your hands or inbox really.

As a broker, you need to try to source new deals everyday. You should have a very busy inbox. As you may know by now, most deals floating around on the internet are simply fake. There are many ways to spot these fake deals which we will go into later. The main point of this post is DD. You should always and I mean always, open up the document and read through every clause before sending it on to a perspective buyer/seller. Another important point is to have an idea of what your point of contact is looking for. You don’t want to waste the time of serious people, so be serious yourself. Do not go posting on LinkedIn advertising you have 250 million MT of gold available for sale as soon as it arrives in your inbox. Take some time to look at the offer and consider the good points and bad points before you send it to anyone much less post its existence in a public forum.


Let’s talk a little bit about how to spot fake deals. There are a few aspects of these transactions that you need to communicate to a buyer or the next person in your chain.

What is it?

How much is it?

How much is for sale?

Where is it?

What about the delivery?

What are the procedures?

The last question is usually the most important as we will go into later. Let’s tackle these questions one at a time.

“What is it?” – You need to communicate every aspect of this question that is possible. For gold, you have to know the purity, what kind of hallmark, how old the hallmark is(exactly how old), what form it is in(dust,dore,nuggets,bars,coins) and usually a buyer will want to know if they are in the GLD system. Some buyers do not care. For fuel products, buyers usually want a spec sheet for the fuel along with the offer. If one of these questions is unanswered in the offer you received, doing DD involves you asking your point of contact to provide the missing information. If the seller or your point of contact is unwilling to do this, that is a major red flag.

“How much is it?” – This is a simple and straight forward question. For gold it should be priced per Kg for dore, dust or nuggets. Bullion bars or coins will be priced according to LBMA or LME. Fuel is usually priced per barrel or per MT and against the PLATTS index or Brent. Gold bullion is usually expressed as a percentage off the appropriate index whereas fuel is usually expressed in a set dollar amount off. There will always be a gross/net discount. For instance, 5/4% discount for a gold transaction would mean there is 1% for the mandates and brokers to split.

Be careful when you see large discount splits over 4%. 14/8 discount is a major red flag. Also, watch the area that the discount is coming from. 12/8 or 12/9 discount is common for gold out of Hong Kong. To see that discount from a transaction originating in Europe would be a red flag.

“How much is for sale?” This is the question that usually puts up the red flag. Especially in Gold and Fuel deals. Unrealistically large numbers in this field are commonplace in deals floating around the internet and this is a major red flag. Don’t get me wrong, there is plenty of gold out there. However, the chances of you being involved in a transaction involving thousands of tonnes of gold that you found on the internet are very slim. Just stick to buying lotto tickets, you have better odds at getting rich with that.

“Where is it?” Make sure you find out both the origin and the current location of the product as they are both relevant and not always the same. This can make a big difference to some buyers who simply do not buy products from certain origins for one reason or another. This can also determine the cost of shipping depending on where it is and where it is going which brings us to the next question.

“What about the delivery?” – You really must familiarize yourself with a few shipping terms. The 2 most common terms are FOB and CIF. FOB meaning “Freight On Board” basically means the product is transported to whatever is the close port or airport from whatever warehouse it is sitting in and that’s it. The buyer is responsible for any shipping charges to its intended destination. CIF or “Cargo Insurance Freight” means that all the appropriate shipping and insurance charges are included in the price of the product. Another term you might see is ASWP which means “Any Safe World Port”. So a common phrase you might see is CIF ASWP or CIF buyer location, which means the seller will ship the product anywhere the buyer wants.

“What are the procedures?” – Procedures, procedures, procedures. This will make or break a deal. A major red flag here is the issue of POF or Proof of Funds. Buyers DO NOT show POF before seeing POP or Proof of Product. It just does not happen. Ever. If you see an offer that asks for POF as the first or one of the first steps, you should walk away as it is likely fake. If you are a new buyer then do not by any means show your POF to any of these people. What happens is they manipulate banks into loaning them money using your POF. Then they go and buy the product that was offered to you so they can actually sell it to you. These people don’t actually own the product on offer. The best you can hope for is offer them a JV and tell them they can still make plenty of money. This issue goes for both Gold and Fuel deals. Diamond deals are usually done at a Malca Amit facility and the buyer brings his own gemologist along with the money and/or bank officer and the seller brings his diamonds but again, buyers do not show POF before such a meeting takes place.

In closing I just want to say that DD is a very important part of being involved in a commodities transaction in any way. Whether you are a buyer, seller or broker, you have to do whatever DD you can on ever part and party involved with the transaction. After all, you only have one reputation. Ruin it and you will be ruined.

Giving you the keys to the castle

The first key on your key ring: Persistence

Be persistent, be successful. This goes for anything you do in life, especially trading commodities. The early bird truly gets the worm.

As a broker, if you hold up a document or you don’t follow up on an offer or lead right away, someone else who is being more persistent than you will close the deal before you do. This is why it is imperative to work with other brokers who are persistent just like you. After you finish vetting out a new offer, send it out right away! Don’t wait for tomorrow as by then the deal could already be gone.

I think it’s important to mention at this point how imperative it is to keep good relationships not only with other brokers, but with your end buyers/sellers. Get comfortable enough where you have more than just their skype contact details, get their mobile phone number and call them on it occasionally but only when you have something really important to discuss or offer.

If you haven’t heard from a broker that has sent you good offers in a while, send them a friendly email asking if they have anything new. This is good advice for not only a broker but a buyer as well.

As a closing point for this post, I want to say something that is very well known to all you brokers out there. There are plenty of buyers out there, a lot of them are real people with real money to burn. However, there are far fewer real sellers that use the same channels that you are to get your buyers. Real end buyers and sellers only deal with people they already know. This is where the persistence comes in: keep trying to build relationships with the right kind of people and eventually the deals will close themselves.


A fairly recent viral video made by a young man by the name of Gary Turk that is still doing the rounds on social media sites does bring up some interesting points. The imagery and poetry of the video are clear and very well done. The overall message being that we should not be so addicted to social media. We should get out there and experience the world without staring at our phones all the time. Fair enough Gary.

Surely this is quite a different world we are living in even compared to 10 years ago. People are constantly sharing, tweeting, pinning, instagraming, tumblring, stumbling upon, and using various other newly created verbs to let everyone on the internet know what they are eating and how awesome their gym/yoga/spinning class/latte/sandwich is.

But does this detract from the experience of actually experiencing these things?

Does the fact that I shared a picture of my amazing sandwich on facebook make the sandwich less amazing?

Quite the contrary in my opinion. Whenever there are large amounts of people in a public place, they will always find a way to distract themselves from their commute. Even now some people still read print media like books, magazines, and newspapers in public! I have seen it!

The fact that I can share the awesomeness of my sandwich actually makes the sandwich even more amazing. I want to share the amazingness of the sandwich with the world and by golly I can and I will.

There is another talking point in the video that mentions how kids don’t go to the park anymore because they are stuck inside playing video games or playing around on an ipad. Kids will be kids. It is ultimately up to parents to engage their children and show them all the fun ways that they can spend their time. It is not fair to blame technology and social media for bad parenting.

Literally millions of views on Youtube, who knows how many likes and shares and tweets about a video that says stop using social media. Hm. “Look up” is the title of the video. Maybe look up irony Gary.

Back to basics

Social Media Optimization or SMO for short, is quickly becoming the most effective tool in any company’s marketing toolbox. The intrinsic value of connecting with your new and existing customers using different social media networks is obvious. From promoting new and existing products to effectively expanding your current client base, Social Media Optimization has changed the way business owners spend their marketing budgets. If this is not true for your business I’d like to point out a few key facts about Social Media Optimization.

As I said, SMO can help you to gain a deeper connection with your new and existing customers. “But how?” you might ask. Well it is a simple concept really. Most people around the world are on Facebook or Twitter or both or at the very least have heard of them and know what they are for. Creating a Facebook page for your business is a great way to reach out to your customers as there is a good chance that a majority of them are using the service. So you have a Facebook page, you tell all your existing customers to “like” your page which many of them will do, and then everyone in your customers’ networks see that they are using your company to get their products and services! Great! Now what?

Twitter is a bit trickier. Regular twitter users are very active and are usually posting or at least checking on their twitter accounts several times a day. This pretty much goes for Facebook as well. Therefore it is vital to not only get your customers to “like” your Facebook page and “follow” your Twitter account, you have to continually create new and enticing content for your customers and the people on their networks to see without coming off as spammy.

Youtube is a great resource as well. Using video-blogging you can put a face to your business which will only enhance the connection you are building with your customers. Promotional videos for your products and services can be produced and posted on Youtube to further engage customers in your marketplace.

Facebook, Twitter, Youtube. These are the big three. There are many other social networks out there that provide a wealth of customer gold that is ripe for the mining. LinkedIn, Foursquare, Pinterest, Tumblr, Stumbleupon, Delicious, Quora, the list goes on.

When used in conjunction with one another, you will not only be creating content that allows your customers insight into your new and existing products and services, you are also creating relevant content that is being viewed by hundreds, thousands, tens of thousands, hundreds of thousands or possibly even millions of people! “Why is this so great?” you might ask. Well, what you are doing is creating tons of relevant content which is in turn viewed by tons of people, which in turn is getting indexed by search engines, which in turn is increasing your organic results in the Search Engine Results Pages (SERPs)!

Okay, you have to admit, it is pretty exciting. You are connecting with new and existing customers by simply promoting your products and services and at the same time you are actually doing Search Engine Optimization (SEO)!

This is why SMO is now the most effective SEO technique. A while ago, Google rolled out its “Panda” algorithm which took the focal point of the search engine crawlers away from metrics such as PageRank (PR) and focuses more on the amount of content out there and how many people are viewing it. This is why Social Networks saw such a huge ranking increase after Panda was rolled out.

Traditional SEO techniques are still viable, but it is obvious that SMO can be used according to “White Hat” standards and arguably much more effectively.

Is Social Media Optimization right for your business?

The answer is always yes!

Where is it all going?

Is SMO the beginning of the end for traditional SEO practices such as link exchange?


It seems that way!


About a year ago, Google rolled out its new Panda algorithm in an effort to move away from traditional indexing metrics such as PageRank and increase the position of higher quality content websites in the SERPs. Shortly after roll out, Social Networking sites saw a huge increase in rankings. This goes to show you that the more people looking at your content, the more relevant Google’s algorithm deems that content thereby giving you better search results. All-in-all it is a pretty simple formula for a successful marketing strategy. As we have already spoken at length about, implementing that strategy may not be so simple.

Search Engine Marketing Pros around the globe are going to have to start changing the way they do business very soon if they want to keep up with the most effective technologies in this industry. Even the guy with the whitest hat will have to hang it up and move on to the SMO world. And we will welcome him in with open arms!

On to the next

Getting your customers to “Like” your Facebook page, follow you on Twitter and +1 you on Google plus is essential. Make sure you have plenty of opportunities for them to do these actions on your website by adding buttons in many strategic areas.

After getting started with Facebook, Twitter and Google+ there are a considerable amount of social networks that you can also utilize to your advantage.

Youtube is probably the best choice to move onto next. Putting a face to your business is an important step to connecting with your customers both new and existing. It is never too late to start a video blog on Youtube about your company and its products and services.

Foursquare offers a great opportunity for existing customers around the globe to share the positive experience they had dealing with your company with other people close to them. It is also a great tool to use while at trade shows or other events to promote your business to people in the area.

There are many, many more networks out there. Let’s discuss some other networks we haven’t talked about yet next post.

Feel free to share some of your Social networking adventures with us!