Traffic arbitrage: what is it and how to make money on it?
Traffic arbitrage is a type of online business, the essence of which is the purchase and subsequent resale of previously purchased traffic on more favorable terms. The essence of traffic arbitrage is very simple: we buy traffic where it is cheaper and resell it where it costs more, the difference is our arbitrage profit.
What is internet traffic arbitrage?
The emergence of traffic arbitrage is largely due to the popularity and development of social networks. The main and basic principle of this business is simple: buy cheaper, sell more expensive. That is, traffic arbitrage is buying it on one source and redirecting it to another, but at a higher cost. Three key players in arbitration:
- A media buyer or arbitrage specialist, or an affiliate is the person who finds traffic and resells it;
- Advertiser: it can be either one person or an organization that offers you their product and pays for its promotion;
- The CPA network is an intermediary between the two above mentioned participants, a connecting link. This is a kind of affiliate program that coordinates and prescribes all the conditions, interacts with arbitrageurs, connects offers from different employers!
The ideal option is when a company combines both an affiliate program with a CPA network.
Basic concepts and definitions in traffic arbitrage
On traffic exchanges, there are various options for purchasing traffic, such as CPM, CPC, CPV. Some exchanges even give you the option to choose the option that suits you best. In this article we will explain these concepts of traffic arbitrage from scratch. You must understand all the features and details, because knowing each model will enable you to take a correct and profitable decision.
CPA (cost per action)
With Cost Per Action scheme only certain visitor actions on a website (registration, click, newsletter subscription, purchase, registration, betting, money deposing) are paid for. In such a way, the advertiser does not risk his money too much, because he knows how much a particular action or purchase will cost him.
CPC (cost per click)
The CPC abbreviation means that a partner pays for every click on his banner. The good thing about the CPC format is that you pay for real actions and real users. When buying a CPM format, you may never get a click, and not understand if your advertising approach worked at all. You cannot test the offer itself. When we buy CPC, we are guaranteed to get a click, in this regard, the format is convenient, because we can count and get guaranteed views.
CPM (cost per mile)
CPM is the price paid per each 1000 views. This means that you set the price you are willing to pay for 1000 views of your banner/popunder by users. The advantage of this ad format is that our goals completely coincide with the goals of advertising platforms: traffic sources sell what they want to sell. It doesn’t matter to the platforms what result the views bring, whether they turn into clicks or convert into orders.
Any proposition of a product or service is called an offer in traffic arbitrage. The first thing you should consider when choosing an offer to collaborate with is its competitiveness. Remember that the market is not empty, besides you, someone else will probably start working with this product. Therefore, the team of any partner company needs a manager supporting the affiliates who will illuminate you about popular offers and give you access to exclusive offers.
What traffic sources are currently popular with affiliates?
The traffic means users of websites who were attracted by advertising and followed the referral link. There are many tools: some are more effective, some less. The basic sources are:
- search results;
- message boards;
- email newsletters;
- social networks;
- links in articles!
The owner of any resource can get earnings on traffic sales. But you must have good writing skills, the texts must be catchy. It is also important to correctly design the visual part or, in the language of the affiliate marketer, “to generate good creatives”.
Essential Terms You Need to Know to Work in Traffic Arbitration
Vertical line is a niche in which an affiliate chooses an offer and starts working with it.
Case is information that tells the details of the past working link. Helps to learn insights that can be further used in work.
Conversion is the action for which the affiliate marketer gets paid. It can be prepayment, purchase, registration, contact information left.
Lead is a person who has performed a target action.
Hold is the period of time during which the advertiser processes applications, checks the actions of clients brought by the webmaster.
ROI is a payback indicator that reflects the result of work. It can be profitable or unprofitable.
CTR is an indicator that demonstrates the effectiveness of the advertising material.
EPC is an indicator that shows the average profit per click of an affiliate.
As you can see, there are a lot of terms. You need to understand them, otherwise you can hardly count on profit.
What a newbie needs to know before starting arbitration
Let’s summarize all of the above and briefly go through the main stages of the traffic arbitrage where to start:
- Choosing an affiliate network;
- Selecting an offer;
- Generation of creatives;
- Buying traffic;
- Launch a campaign and start tracking!
You will have to invest your own funds (from $ 500) to test several approaches at once. You need to be prepared for high competition. There is no need to try to work with several traffic sources at once. Pick up the biggest one like Facebook or Google Adwords and study it.
Yes, traffic arbitrage is a profitable way of earnings on traffic. But be prepared that you won’t make money easily here. Therefore, delve into, study, analyze. Whatever traffic sources you use, do not forget to customize campaigns for your audience, monitor the conversion price and change the approach as soon as the expense exceeds the income. And of course, do not stick to a single source.