15 Sep 2021

Traffic arbitrage for beginners

In this text, we’ll answer the most burning questions of those who want to work with traffic arbitrage but are afraid to ask how to. Our succinct yet cheery guide offers the basics and important links to lend a helping hand to those who are ready to start buying and selling traffic.

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Analysts say that, over the last few years, the traffic arbitrage industry has been getting stronger and larger, showing an impressive 10% annual growth. This proves that it performs well and is pretty promising, so now’s the best time to jump in.

What is traffic arbitrage?

Traffic arbitrage is a method of online earning wherein you buy traffic at one price and sell it at a higher one.

Example: We have a company that sells spinners called Spin’n’Go, and they want to sell even more spinners! You’re a media buyer. You buy cheap traffic (e.g., clicks from social media platforms or contextual ad networks like Google Ads) and Resell it to Spin’n’Go at a higher price. But you’re not just selling traffic: you’re also selling leads, i.e., real actions—for example, spinner orders. In a nutshell, you help the company acquire customers.

The desired end actions may be different: anything from placing an order and adding items to a cart to installing an app or filling out a registration form.

Basically, arbitrage is a process through which you earn on the spread between the price at which you buy traffic and the price at which you sell it. On top of that, media buyers most often promote products created by third parties—companies and brands ready to pay for traffic (given that the users the media buyer brings in actually buy the company’s products).

I’m a beginner. Will I be able to handle traffic arbitrage?

We’re not therapists, but we recommend that you give yourself a little credit.

That said, if you’re going to work with arbitrage, you’ll still need to know some basic digital marketing concepts and terms and what they mean. Ideally, you’ll at least know how to work with them.

Let’s delve into the term “traffic.” We’re sure you know that, in the digital world, the word “traffic” means the flow of visitors, i.e., clients, to an online resource. Traffic can be sourced from a multitude of places, which you can read about here. Our article also has a section devoted to traffic arbitrage, just FYI.

So, you latch onto the word “traffic” and start exploring other related terms, such as “leads”, “conversions”, “business models”, “SEO”, “context”, and others. That’s how you learn digital marketing terms. Here are a few helpful links to help you learn:

What does arbitrage have to do with affiliate networks?

Arbitrage is one business model for managing traffic in affiliate marketing.

But you shouldn’t confuse the terms “arbitrage” and “affiliate networks.” The term “affiliate networks” is an all-encompassing thing that spans other business models: content projects, SEO, SMM, and email marketing. In fact, an affiliate network is an intermediary between the advertiser and the media buyer (publisher).

Affiliate networks for beginners

When you join an affiliate network, you get a simplified arbitrage arrangement complete with an advertiser with whom all organizational issues have already been settled. Otherwise, you’d have to look for an advertiser willing to pay for the clients you bring in.

When working with affiliate networks, the only thing you need to do is buy traffic and resell it to a program from the affiliate program catalog that catches your eye. But for starters, you should check out which types of traffic the particular advertiser allows.

Statistics suggest that almost half of media buyers concurrently promote no more than 10 programs, and even that number is pretty high. Don’t try to conquer the whole world right away. When you’re just starting out, go with just a couple of programs.

Where to source traffic and whom to sell it to

Your first go-to resource is social media. This is where you buy targeted ads and use them to lead users to the advertiser so that they become clients of the brand, bringing money to the advertiser—and you for target actions. There are several ways to place ads: via advertising accounts on social media, on advertising exchanges (internal or external), or by making your arrangements directly with community admins.

Here are some articles that’ll share some of the finer points of using social media in arbitrage:

Your second instrument is contextual advertising. The procedure resembles sourcing traffic from social media, but you manage your campaigns in a contextual ad account (e.g., Google Ads).

You pay for ad impressions in search results or on partner websites triggered by certain user queries. Through these ads, you drive clients to advertisers (or, for example, you lead users to your landing page and then redirect them to the advertiser’s website).

A helpful article:

How Google Ads works

Google Ads isn’t the only platform for publishing banner ads. You can deploy a banner on third-party websites that aren’t part of major advertising networks or through other display ad networks or advertising agencies. Just Google them. Another thing you can do is approach the owners of websites you think are a good fit for publishing your ads.

In-app advertising is done in mobile apps and provides you with a wide range of tools, including banners, videos, interactive ads, and push notifications. Google and Unity Ads allow you to display ads in mobile apps.

Another option is buying ads on teaser networks. Teaser networks are spaces for placing teasing banners (e.g., “You won’t believe how a spinner can boost your sexual vigor”). As cheap as this traffic acquisition method is, it only works for unseemlier ads.

Are there any other questionable traffic sources?

Dubious traffic sources have always been around. Advertisers (and most users) don’t trust or respect adult traffic or teaser and pop-under ads. You can read more about them here.

When it comes to arbitrage, you also have to think carefully about programs’ subject matter, i.e., verticals. The most unwelcome fields are gambling (online casinos etc.), dating, and nutra products (health items without scientifically proven benefits).

On the one hand, these in-demand verticals can yield heavy gains. But the downsides outweigh the benefits, believe us. If you work with risqué traffic, contextual ads are not for you: behemoths like Google will ban your gambling ads and other unwanted advertising materials in a flash. Online casinos, by the way, aren’t allowed in every country.

How do I select a vertical?

This article gives a detailed explanation of how novice media buyers should pick programs. Our main tip is to only work with what you’re good at. That way, it’ll be easier for you to find a target audience, understand its pain points and needs, and then launch a relevant advertising campaign.

Can I ever get free traffic?

Yes, but you’ll have to work hard and invest a ton of time and effort. In this case, we’re not quite in the land of arbitrage anymore.

Chat on forums, social media communities, or messengers. If you establish a good reputation and know when—and where—to deploy affiliate links, this will be your chance to get some free leads. If you fail, you’ll likely be banned.

Your own content project or blog (e.g., a WordPress-powered blog), vlog, or email newsletters can also be considered “free” ways to source traffic, but they require enormous patience and even talent.

Why worry about traffic arbitrage?

Get ready: here come some major props to arbitrage!

For starters, this is one of the fastest paths to earning money (especially compared to SEO or content projects). Life goes very fast in the world of arbitrage: you launch a campaign, see the results within days, get money, then reinvest it.

Media buyers working with affiliate networks are not always happy with the hold period, which is the time when the advertiser verifies a media buyer’s earnings. If everything is okay, the media buyer can withdraw the money. For cases like these, affiliate networks offer special tools. Admitad, for example, offers Instant Payout. This service allows earnings to be withdrawn within 24 hours.

The arbitrage industry has a slew of traffic sources and can touch on almost all products and services. You don’t have to waste money creating your own ad space: you can drive users to the advertiser’s website directly from social media or through context ads.

A media buyer doesn’t bear the extra costs associated with production, logistics, and storing and shipping products. In addition, some brands have already organized advertising matters for you: users know major companies and trust them.

Naturally, of course, arbitrage comes with its downsides. Above all, you’re always at risk of spending your whole budget. Once you’re out of funds, your ad campaign will freeze—and your profit will forget the way back to your account.

On top of that, we can’t really say that arbitrage is a very stable source of income. It’s affected by the season and competition, and advertisers on affiliate networks can alter the rules. And, since you’re working with people, never factor out random chance.

How much can I earn?

We don’t know! Or maybe it’s more appropriate to put it this way: there are myriad factors that affect a media buyer’s earnings. It all depends on how much you spend on traffic and ads, how optimized your advertising campaign is, how many leads you get, and what your conversion rate is. Last but not least, don’t forget about chance.

Simply put, here’s how a media buyer’s income is calculated: take the earnings from leads and subtract the amount spent on traffic. And voila! What’s left is your profit. Keep in mind that hitting break-even is a pretty big step for a beginner. You have to start somewhere.

What else should I know about traffic arbitrage?

Important tip: Never pour your whole budget into one solution, no matter how great it seems. Test drive various channels, ads, programs, products, and audiences, allocating a small portion of your budget to each campaign. Monitor every option’s performance and double down on those that perform better. Professionals recommend spending up to 20% of your budget on tests.

Where can I seek inspiration?

Look for media buyers’ cases on the interwebs. Read communities, as well as media buyers’ and affiliate network chats in messengers and on social media.

Remember: just because someone else achieves great success doesn’t mean that you will, too, necessarily. Audiences, products, and channels always differ! You don’t need to copy other people’s ideas. Just keep getting inspired and trying things your way.

I didn’t get any of that. What should I do?

We have a course for beginner publishers. In addition to lots of other neat stuff, it has a section dedicated to arbitrage.

Now you’re familiar with the fundamentals of traffic arbitrage and the main terms of this tricky—but not rocket science-tricky—business. This is enough knowledge for you to start testing advertising campaigns. Practice is key. Learn more every day, explore new cases, ask questions, and read helpful articles (like this one that you’ve just finished).