In this quick guide we’ll explain what traffic arbitration is, and shed some light on how it’s done.
Traffic Arbitration: Quick Crash Course
So, what is traffic arbitration? In essence, it is a technique to lead the right people to a product they need. The mechanics behind this marketing wizardry are quite simple:
- First, you buy traffic cheaply from a specific source, like social media of choice.
- Then this traffic is redirected to another web-outlet: online platform, digital store, gaming website, and so on.
- The money is made from the cost difference (margin): cheap traffic is resold at a higher price to your client.
Even though it sounds like a no-brainer, in reality the arbitrageur should have a solid skillset to launch successful campaigns. They include understanding your target audience, knowledge of Search Engine Optimization (SEO), experience in various types of promotional strategies, and so on.
Your payment doesn’t necessarily depend on the number of visitors you drive to a website/mobile app. It’s also majorly affected by a number of purchases or other useful actions that guarantee Return of Investment (ROI).
Remember: The fundamental rule to follow is redirecting the right people to the right place.
Arbitration Networks: The Victorious Trifecta
There are three principal networks employed in traffic arbitrage: CPC, CPA, and CPM. Let’s dig a bit deeper:
CPC
CPC stands for Cost per Click. It’s the simplest form of arbitration, in which you place your client’s advertising on your own online outlet: website, blog, landing page, or any other type of web platform.
In this scenario, payment goes for every click-on-the-ad your visitors make. And, as we’ve mentioned, you bank the money once the amount of compensation exceeds your own investment in the online traffic. While this network is still widely used, it’s also seen as rudimentary: even chock-full traffic doesn’t always guarantee profit these days.
CPA
CPA refers to Cost-per-Action (sometimes A stands for Acquisition). Under this model, an arbitrageur doesn’t get paid for just clicks, but also for a specific action a visitor performs. It can be a purchase, creating an account, requesting a consultation, installing an app, and so on. Therefore, there are several CPA subtypes: Cost per Install, Cost per Lead, Cost per Sale, etc.
By far, this is the most advanced and subtle strategy, which requires solid preparation and thorough target audience analysis. Money is earned through a commission in this scenario.
CPM
CPM means Cost per Mile, however it’s not the road miles we are talking about. The main measuring unit here is one thousand impressions — if a thousand people see the ads placed on your web outlet, you receive your cut. What’s great about this method is that you don’t need to make them do anything: neither clicking, nor performing some actions.
Arbitration Types: Choose One (or Multiple)
What’s efficient about traffic arbitration is how flexible it is: you can adjust your strategy to any situation, context, or segment. Here are some of the canonic arbitration types you can study:
Social media arbitration
Online traffic is bought from social media like Instagram: Cost-per-Click (CPC) rates are always lower there than those in search engines. Then, this traffic is redirected to the search engines to boost your client’s promotion. The money is earned from the cost discrepancy: cheaper social media vs. more expensive search engine CPC.
Search engine arbitration
This technique is situated around keywords. The keywords play the role of the guiding lights that attract customers who search for specific stuff by typing in words related to it: “buy car batteries”, “apartment for rent”, “resorts in Michigan”, and so forth.
The trick is buying keywords cheaper in one search engine and reselling them for a higher price in another.
Native arbitration
An arbitrageur buys traffic coming from the native advertising platforms. There are dozens of those: UserEvidence, Facebook for Business, StackAdapt, and others. In the second phase this traffic is taken to the search engines and used as the keyword traffic. Usually, the price differential is quite pleasing.
Display arbitration
The approach features the online banner ads you’ve surely seen a lot. The traffic generated with them is usually cheaper. Then, it can be converted into search engine results, after which the Cost per Click method comes into play. A drawback is that you need to have experience in successful banner-ad campaigns. But in the long run this type of arbitration pays off considerably.
Click arbitration
This strategy is achievable through buying clicks from an online service. Then they are run through Cost per Click ads, bringing in ample margin.
Content arbitration
In this strategy, the key is the captivating content. Basically, you need to make advertising placements on some sort of viewer attraction — pop-science videos, funny animal compilations, popular online books — and redirect the traffic to the advertised product.
AdSense arbitration
In this case, you need to obtain the cheapest traffic possible and run it through the Adsense ads.
Lead arbitration
Finally, you can use cheap traffic to motivate people to create accounts, sign up for services, and so on. It’s called “lead generation” — those leads are sought after by various companies who seek to enlarge their client base.
Play Nice, Play Clean
And finally, don’t use deceptive tactics to generate traffic. This will result in low-quality clicks and displays with people quickly abandoning pages and dismissing your client’s offer, since no one likes being tricked. Besides, misleading online advertising campaigns go against the law in many countries, so you may risk even more than just your reputation.
As for the rest, there’s still plenty of fish in traffic arbitration. Stay tuned to find more useful info and tips!
