Traffic Arbitrage Explained
Traffic Arbitrage is an online business concept that usually results in the rich getting richer, because to properly execute this business setup, it ideally requires an ungodly amount of ‘throw away money’. This business model is essentially creating a website and then applying to ad networks as a publisher to get paid on a CPM or CPC basis for displaying ads and then supplying your website with non-organic traffic through another ad network using an advertiser account. Of course you would need to buy impressions to your website at a lower cost basis then what you are receiving for showing ads on your website.
This sounds very simple and easy on paper, but in reality this is one of the most complex and challenging business models to succeed with. The first problem will be getting approved by top tier high paying ad networks as a publisher. Many high end ad networks require publishers to have established websites with hundreds of thousands of monthly page views, if not millions by some network requirements. The only whitehat and legitimate ways to achieve these numbers are by purchasing a massively popular already existing site for a high price that happens to have huge traffic, or by lucking out on SEO and building a high ranking site that draws organic traffic. Building such an empire would not only take years worth of time (if it ever happens) and also require thousands of dollars for content creation and hiring SEO experts. The last and most popular option would be to buy your audience through either Native Ads or Facebook ads, however buying millions of visits on a monthly basis from a reputable ad network would require and obscene amount of funds. These are really the only ways to get approved (that aren’t frowned upon) as a publisher with top tier ad networks.
Of course there are shadier ways in the gray area to achieve those numbers, such as cheap popunder traffic or bot traffic, etc. However this would be the fake it until you make it method, and you would have to switch to real quality traffic once approved as a publisher by a stricter network.
The next challenge is finding the price discrepancy which is very difficult. If you are purchasing heavy traffic from FaceBook ads, you would need your display ads on your site to have a ridiculously high CPM effective rate. The downside with many ad networks is if you have 3 banner spots per page on your website and you have 100,000 page views, you won’t be paid on the basis of 300,000 ad impressions because almost no ad network can guarantee you a 100% fill rate, so some of the money you spend on traffic will be wasted. Another downside is even if there is a 100% fill rate, the back end reporting data will almost always shave off some impressions, either due to ads not properly loading or the user exiting the site too soon etc. Finding multiple page visitor analytic software to match 100% synchronized is virtually impossible.
Many times you will spend more on ads to bring visitors to your site, than what you will receive from your article banner views. It requires weeks of testing various ad network combinations, which intern requires thousands of dollars to be spent in the process. Not to mention you will need to either create constant new content for your site or outsource content creation. Another cost is hosting for large scale sites can easily exceed $500 monthly for heavy cloud use or a dedi server. Overall, this further proves my point that traffic arbitrage is mainly for the rich getting richer. It is possible to burn tens of thousands of dollars, just experimenting before turning even $1 in profit. Sorry for the negativity of this article, but this is the reality. Gary Wright would be very disappointed in me today, I am being the dream killer instead of the dream weaver.
To attempt at finishing this article in a positive way, below I will demonstrate what appears to be an example of paid traffic arbitrage. One site that gives the appearance of achieving success is newser.com. If we look at Newser’s non organic traffic, you will notice heavy referral traffic on SimilarWeb from Juno, EarthLink and NetZero. Those three referrers are doing some heavy lifting of the total traffic influx for Newser.
These three sites are part of United Online Communications network. It appears Newser is purchasing traffic from http://www.unitedonline.net as outlined in the image above. Now we must find out which networks Newser is using to monetize their content with.
On the photo above, you will notice that Newser is using RevContent. They are also using the adtags that contain the URL 4dsply, which means they are also using AdSupply. In order for this to be profitable for Newser, their monthly ad buy budget for their NetZero and other campaigns would obviously have to be a lower dollar amount then what they are getting paid by AdSupply and RevContent in order to be profitable.
