Traffic Arbitrage has been a popular topic in digital marketing for many years. The concept started with the existence of viral websites like BuzzFeed and ViralNova and how they use traffic arbitrage as their main revenue strategy. In fact it was so profitable that Viral Nova was sold for $100 million. Since then many people have been trying to replicate similar success.
1) What Is Traffic Arbitrage?
Before we talk about how traffic arbitrage works, let’s talk about what it is. According to Investopedia, arbitrage is when you buy something with the express purpose of selling it at a higher price. Traffic arbitrage, is when you buy traffic for your website at a low price so you can sell it to another firm at a higher price.
2) How Does It Work?
What would an example of traffic arbitrage look like? The first step is to drive traffic to your website at a low cost. For instance, you could purchase a pay-per-click ad that only costs you $0.01 every time someone clicks on it.
Once you have this traffic, the next step is to sell it. By selling the traffic for a higher price than you paid for it, you will net a profit. You could do this by selling ad space on your landing page. If you get paid $0.30 every time someone clicks on an ad on your page, you could potentially net $0.29 for every click you purchase.
3) Where Can You Find Traffic Arbitrage Sources
Many years ago this was easily done. Most marketers would go to Facebook and create ads with clickbait headlines which garnered very high click-through rate. Because of the high CTR advertisers were getting high relevancy scores, and paid as low as $0.01 per click. Over time, Facebook started clamping down on clickbait ads, and it got more difficult to get cheap clicks from Facebook Ads.
These days the next best options would be Content Distribution Platforms such as OutBrain and Taboola. It’s still possible to get $0.01 – $0.03 per click but it’s difficult to scale up the volume if you set the bid cap. Companies like Outbrain and Taboola are also getting more strict on the ad creative and often suspend ads if they feel it violates any of their policy.
4) Stretching Your Advertising Dollar With Social Media
If your content is funny or entertaining, there is high chance a reader will share the content with his or her friend. You’ll then get a ripple effect from the initial $0.01 that you used to bring the reader to your website. For example, John clicks on your and and comes to your website. Enjoys the content then shares it with his friends. When his friend sees the shared post and subsequently comes to your website there will not be any cost for you.
Sometimes the post may go viral where people will keep sharing and sharing. So that initial $0.01 you paid to bring in the first person, may not be actually giving you hundreds of new visits via people sharing your website on social media.
5) Placing Ads On Your Website
Now that we understand the concept of bringing in cheap traffic to your website, we need to then look at how you can monetize the traffic by placing ads on your website. Remember that driving traffic is only half the battle when it comes to traffic arbitrage. You won’t make any money unless you are effectively selling ad space.
Generally, there are two kinds of ads you can include on your webpage: Pay-Per-Click (PPC), and Cost-Per-Thousand (CPM).
- PPC are the easiest, so you should start with these. One of the most popular sources of PPC ads is Google’s AdSense. where you’ll get paid each time someone clicks on the ads on your website.
- CPM ads pay based on “impressions.” This means that, for every thousand people you drive to your page, your advertisers will pay you.
Depending on your website, you should focus on the right type of ads. For example if you’re running a Viral Quiz site where you get many pageviews for each visit, then CPM may work for you. On the other hand generic blog or content sites may much lower pageview per visit ratio, but readers may tend to click around more.
6) Improving Your Click-through Rate (CTR)
You could try having a mix of CPC and CPM ads on your website and try different A/B tests to see which combination works best. Ultimately you’ll want to increase the CTR of people clicking on the ads on your website. To do so you’ll have to try different ad placements to see which gives you the highest CTR rate.
Here are a couple of strategies you can use to increase your CTR.
- Ads above the fold have much higher CTR
- Image / Video ads may not always work better than text ads so do test it out
- Ads within a content have higher CTR than Ads on the sidebar or outside of the content
- Ads should be responsive and the sizes should change according to the device the user is on
7) Is Traffic Arbitrage Still Viable?
Using traffic arbitrage as a tool to create revenue isn’t as easy as it once was. New algorithms, increased restrictions, and savvier consumers all pose challenges for marketers attempting to use this strategy. However this does not make traffic arbitrage impossible.
What do you think? Have you tried using traffic arbitrage? Let us know what your experience was like in the comments!