Advertising arbitrage, or traffic arbitrage, is the process of monetizing Internet traffic by converting it from one earning model to another, usually from pay-per-click (CPC) or pay-per-view (CPV) to action-based (CPA) models.
A person who engages in advertising arbitrage is called an arbitrageur. The common perception is that arbitrageurs make money by buying and selling traffic (buying it at a low price and selling it at a higher price), but in fact the essence of their job is to manage the risk associated with converting traffic into leads. If the conversion rate is low, the arbitrageur makes no profit and, in fact, suffers a loss.
What an Arbitrageur Does
Abitrageurs perform the following tasks:
- Research the target audience;
- Analyze competitors’ strategies and approaches in the chosen niche;
- Track current trends and successful techniques;
- Select the most appropriate traffic source;
- Design and implement a sales funnel;
- Invest in the necessary resources: buy or rent accounts, domains, use anti-detect browsers, spy services and trackers;
- Create preendings, landing pages and Safe Page if necessary;
- Customize cloaking for offers that are in the “gray” or “black” zone;
- Launch advertising campaigns;
- Monitor key performance indicators, including conversions, clicks, conversions, leads;
- Optimize advertising campaigns to improve their effectiveness
What’s the right word: arbitrageur or webmaster?
In affiliate marketing, there is often confusion between the terms arbitrageur, webmaster and media buyer. While all of these professionals are involved in the traffic arbitrage process, there are key differences between the two.
- An arbitrageur works independently on advertising campaigns (ACs) and data analysis. He has webmaster skills, but does not have his own web resource.
- Media Buyer deals with buying targeted advertising and expanding effective ad bundles. He usually works as part of the arbitrage team.
- Webmaster owns and manages his own traffic-generating Internet resource.
The term “arbitrage” originally appeared in the context of SEO, and it was webmasters who were the first arbitrageurs, which has led to confusion in the use of these terms in modern internet marketing.
How to become an arbitrageur
Before you start engaging in traffic arbitrage, it is important to realize that this field requires certain knowledge and skills. Arbitrage is characterized by a high threshold of entry, and it is necessary to start by learning the basics of marketing in order to successfully manage traffic and avoid mistakes in the future. It is important to understand the basics of contextual, teaser and targeted advertising, as well as master market segmentation and study consumer behavior. You can take advantage of free courses or more in-depth training at online schools, although sometimes a superficial familiarization with the material is enough.
If you don’t have experience working on your own, it’s helpful to learn how to set goals and monitor your progress. Otherwise, the results of arbitration, which can depend on unpredictable factors, can be frustrating when you first fail.
It is also recommended to gradually learn the specific arbitration terminology (which mostly consists of Anglicisms), payment models and specialized verticals. This will help you focus on learning one specific niche and not wasting your efforts on everything at once. Working on one offeer will make it easier to follow up with others as there are many similarities between them. Once you’ve learned the basics and understand the logic behind an offer, you can start gaining experience.