What is Arbitrage?
Arbitrage is the act of buying something in one market and then re-selling it another market for a higher price. The concept of arbitrage is most often used in finance, where an arbitrageur might purchase Japanese Yen from one exchange and then turn around and sell them on another exchange for a slightly higher price.
More and more, though, arbitrage is being used to describe marketing activities. In this post, we’ll talk about click arbitrage. Click arbitrage follows the same principle as the above example, but the asset is different— clicks instead of Yen. The marketer who is engaging in click arbitrage buys clicks on one market, and then sells them for a profit in another market.
We’ll focus on click arbitrage with Google Adsense in this post. As you probably know, Google Adsense is a platform where content creators are matched with advertisers. Then, the content creators are paid when people on their website take an action— in our case, when they click on an ad. So, in essence, the content creators are selling clicks to the advertisers.
That’s simple enough; that’s a very basic way to monetize your website or blog. So where does click arbitrage come in?
Buy Low, Sell High
Well, if you’re selling clicks for one price, to arbitrage the market, you just have to buy clicks for a lower price.
So, you can search for an ad network where you can buy traffic to your blog or website. If you end up paying less on average per click than you make from Adsense, you’ve engaged in a profitable click arbitrage.
Now, this is much easier in theory than it is in practice. The market for digital advertising is much more efficient today than it was just a few years ago; but if you’re willing to put in the work and get creative, you can still find profitable opportunities.
Where can you buy clicks?
Some alternative ad networks outside of Adsense are:
Chitika: Similar to Adsense, and is easy to get started with. It only serves contextual ads, which will improve readers’ experience on your site.
Taboola: Taboola is an ad network specializing in native advertisements. These ads generally have a high Click-Through Rate and can be quite profitable. Taboola is ideal for blogs and websites who already generate significant traffic, upwards of 10,000 users/day. Try this for click arbitrage if you have a large site.
Infolinks: Infolinks works with big brands such as Pizza Hut, Facebook, Ebay, TripAdvisor and more. There are no minimum traffic requirements to get started, no registration fees and the integration is very simple. It is a good turn-key solution that rivals Adsense in its simplicity. See if you can pay a lower CPC than you get from Adsense with Infolinks.
PropellerAds Media: PropellerAds specializes in pop-under ads. They have a lot of international inventory and so could be useful in attracting users in smaller markets to your site.
Media.net: Media.net is powered by Yahoo and Bing and could be a good arbitrage option for Adsense. It leverages these two companies’ search data to provide contextual, responsive ads targeted to your users. It also automatically optimizes ads for either text or display.
Other options to consider:
Get creative with where you look for traffic. New social media platforms often offer very low CPCs when they’re just starting out as a way to grow the platform. For example, CPCs on Reddit were quite low when they first welcomed advertisers to the site. So you could have bought traffic from Reddit and then profited from the conversions with Adsense.
Influencer marketing also has the potential to give high-quality, low-cost traffic. If you develop relationships with influential bloggers and social media influencers, you could be able to strike a deal where you pay for traffic that is much cheaper than what you make from it. Even better, offer the influencer free product in exchange for the shoutout instead of cash; this will be cheaper and could make their endorsement of you seem more genuine.
For more information on this, check out this article, it is thourough and informative: http://monetizepros.com/display-advertising/cpc-arbitrage-what-it-is-and-how-to-pull-it-off/