How to make money on traffic arbitrage: a full guide for beginners

If you thought you’re familiar with all the ways of making money online, traffic arbitrage is here to prove you wrong.

We have prepared a detailed guide about this efficient way of earning money online. If you want to know how to use this technique to generate income, read more to find out what is traffic arbitrage and how to earn money on affiliate programs.

How does traffic arbitrage work?

Traffic arbitrage works like this: you purchase traffic and then resell it and make money on the price difference.

The arbitrageur drives traffic to the advertiser’s website or app and gets paid a commission, usually a fixed percentage from sales. An arbitrageur doesn’t receive any money in advance from the advertiser, and earns money only when the profits from the users they bring exceed the cost of advertising and promotion.

Let’s take a look at how it actually works. 

A clothing store wants to increase online sales and is willing to pay $10 for each lead. The arbitrageur sets up and runs ads and starts driving traffic to the advertiser’s website. The cost for ads is $300. It brings 50 new clients, the advertiser pays a commission – $500. So the arbitrageur’s revenue is $200.

But there may be an opposite example. 

When, under the same conditions and spending on advertising arbitrageur brings not 50 customers, but only 10. Then his reward will be $100, and he will lose $200.

Who participates in traffic arbitrage?

The advertiser is a company – seller of products, physical or internet services, or any business which needs new clients or users. An advertiser composes an offer, where they provide information about the company and their products/services, as well as the conditions of promotion, such as restrictions for traffic sources and the amount of commission.

Arbitrageur is usually an affiliate (also called “publisher” or “webmaster”) who sets up paid ads, brings traffic to advertisers and makes money on the price difference. If an affiliate pays for ads in order to promote advertiser’s offers, they become arbitrageurs. Arbitrageurs work according to the terms in the particular offer and get paid for bringing new clients.

CPA-network is a platform, which performs as a bridge between advertisers and affiliates. A CPA-network takes the organizational side of the affiliate program, helps tracking the traffic and regulates financial transactions between advertisers and publishers.

What does an arbitrageur actually do?

An arbitrageur sets up ads and brings in leads, users who are ready to complete the targeted action. An arbitrageur can use all possible ways of promotion unless they’re not restricted by an advertiser. Restricted traffic sources are always listed in the offer.  

Among the most popular promotion ways used by arbitrageurs:

• Contextual advertising
• Targeted advertising
• Posts on social media
• Buying ads from bloggers on Instagram or YouTube

There are many ways to attract traffic, but the crucial is to know them and use them depending on the promoted product or service. The main thing in traffic arbitrage is to set up ads and analyze the results. 

What is an affiliate network?

CPA networks help advertisers and affiliates find each other and work together. A good affiliate network looks like a marketplace, only it has offers instead of goods, and publishers instead of buyers, who sign up to the offers and drive traffic to them. 

CPA network does all the daily operational work: tracks the conversions, provides both the advertisers and affiliates with statistics and analytics, and oversees the payments.

How to choose an affiliate program to make money on traffic arbitrage?

There are a lot of CPA-networks, but it’s better to check them first before joining. Reputable affiliate networks constantly check advertisers and publishers – that’s what we do at Indoleads. If an advertiser or webmaster has violated the terms or has not passed the check, we do not work with him. At Indoleads we value our reputation and care about our clients – that is why we cooperate only with proven advertisers and webmasters. Deception and non-payment are excluded.

Indoleads has a convenient catalog of offers:

You can filter affiliates by payment models, verticals and GEOs. We have over 2,000 affiliate offers from 180+ countries: European countries, the Americas, Asian and Latin American countries. 

For example, Adobe affiliate program is available worldwide:

We provide our affiliates with modern tools for setting up and analyzing ad campaigns, as well as with the access to full statistics for conversions. For newbies in affiliate marketing there are guides in our blog with useful tips on how to start and how to earn using CPA marketing and traffic arbitrage.

What are the payment models in affiliate marketing?

When you start choosing affiliate offers to promote, you will most likely notice there are different payment models depending on the offer. They can be called price models, payout models, conversion types, and so on. So what does that mean?

Payment models tell you what your goal is and what you will get paid for.

The most popular model is CPA model – cost per action, which means you get paid for a specific action completed by your user. 

Other popular payment models include:

CPI – cost per install: a publisher is paid when a user installs an app.

CPL – cost per lead: a publisher is paid when a user leaves contact details, for example, email or phone number.

CPS – cost per sale: a commission is paid when a user buys something at an advertiser’s website.

Keep in mind that these three payment models are actually subtypes of CPA model, because they all set a particular action as a goal. That’s why sometimes affiliate offers indicate CPA as a payment model and then specify what kind of action is actually required: purchase, registration, etc.

Where to start with traffic arbitrage

If you don’t know anything about marketing and advertising, you can easily learn it. People who work with online marketing on a daily basis, keep learning something new too, as they always need to boost their skills. Without understanding the basics, it’s hard to make money from traffic arbitrage on the Internet. You need to understand how Google Ads works, how to run paid advertising, how to set up targeted ads.

You can look for courses about internet marketing – on Coursera, Udemy, and other platforms. Many educational sites have free courses, where you can learn the basics. Forums where publishers share their experience and groups on social media about marketing and advertising are very useful sources of information too. However, for practical skills, you need to start promoting offers: sign up at CPA network, for example, Indoleads, choose affiliate programs and learn as you go.

When starting out, you need to learn about these: 

• Targeted advertising
• Contextual advertising
• Teaser advertising

To get started in traffic arbitrage you will need an advertising budget. Start with a small budget, because you’re still learning and there is always a risk that you will spend it on untargeted traffic and earn nothing.

If you’re a beginner in affiliate marketing, it’s better to choose one niche, for example fashion, and test all the options within, but do not go beyond it. Thus you will be able to quickly understand how everything works and gain some useful experience. Starting working at once in a variety of niches might not be the best idea. Even experienced arbitrageurs work only in some specific niches, where they have an excellent understanding of traffic sources and audiences and can earn good money.

How to drive traffic

1. Choose an offer

At the end of the day your income will depend on the terms of the offer. That’s why choosing the right offer is highly important.

Before you start working with an offer, get all the information about the advertiser and its product or service. Often advertisers provide only basic information in the offers, and publishers don’t do their own research, while this is highly recommended as you will get more useful information. Look at the terms offered by the advertiser – the payment model, the required targeted action, the amount of commission, the hold period and other metrics.

To begin with, choose offers with simple actions – subscription, registration, booking. The conversion will turn out to be higher if users need to perform only one action – for example, create an account in the service.

Take into consideration the hold period, a period of time during which an advertiser (or a CPA-network) checks the quality of traffic and withholds a payment. 

Sometimes not only you need to attract new users, but also get them to be active in the service, on the website, or in the app. For example, the advertiser needs new clients not only to download the game app, but also to create a character and play it for a certain amount of time. Only after completing all targeted actions an arbitrageur will get their commission.

Here is how an offer at Indoleads catalog looks like:

2. Determine the GEO

If an offer is targeted for the users from Brazil, and you bring the users from Chile, an advertiser won’t pay a commission. So always pay attention to the GEO section in the affiliate program’s description.

3. Make a portrait of your target audience

When you have selected an offer and the GEO, it’s worth studying the audience – you need to determine who you want to show ads to. To do this, try to answer these questions:

• Who will be interested in the product/service?
• What ‘pain point’ will it solve?
• Why does the audience need this product?
• What will catch the users’ attention in the ad?

Do a little research about the product, look at competitors’ ads. You need to build a portrait of the audience, so you can accurately imagine who you will attract to your ads. The higher the accuracy of the target audience portrait, the better the quality of traffic you’ll get.

4. Choose a marketing channel to drive traffic

An advertiser can set restrictions on the sources of traffic. At Indoleads, restrictions are listed in offers’ descriptions right below the metrics and the information about an advertiser:

5. Make an effective creative

The very essence of any advertising is in a catchy title, motivating call to action (CTA) and a matching picture. These three elements convey information about the product, creating interest and encouraging a user to click on the link and take a targeted action.

For example, to promote online courses, use a picture of a successful professional who took the course and made a lot of money. Tell his story to get a response from the same audience – people who want to change their profession and start earning a lot.

6. Test your ad campaigns

Analytics is everything. You need to constantly monitor the performance to detect problems and errors on time. The quicker you find them, the faster you can fix them and improve the conversion rate.

Where to get traffic to make money on traffic arbitrage

Affiliates use both free and paid marketing channels. When they start utilizing paid ones, they become involved in traffic arbitrage. As we’re talking about traffic arbitrage in this guide, let’s focus on paid channels.

Paid marketing channels

Paid marketing channels are much more profitable than free ones if used properly. You can set up ads so that only interested users see your ads and attract leads more efficiently. 

Let’s take a look at the main paid sources:

• Contextual advertising

These are ads that appear on websites or other media. The ads themselves are selected and served based on the context of what a user is looking at, so the keywords are crucial here. You create banners with a picture and a link to the advertiser’s website, customize the display to your audience and run the advertising campaign. This can be done in Google Ads, Yahoo!Bing Network, Outbrain and other platforms. The advantage of contextual advertising is obvious – only the users who are interested in the advertised product/service, will see it.

• Teaser advertising

Teasers are the same banners, but more catchy – often a flashing ad with a spectacular, clickbait text. Teasers are suitable for entertainment services. This is an inexpensive way to attract the audience, but teasers often annoy users, hence the conversion is unstable.

• Targeted advertising

One of the most effective sources of traffic. You can target your audience by age, interests, gender and other characteristics. The most effective are Facebook and Instagram platforms.

What are the types of traffic arbitrage?

There are many types of reselling traffic opportunities, and it is highly recommended for arbitrageurs to test all of them, as this will definitely contribute to diversification of business prospects and broadening the spectrum of working techniques.

Here are some of the most popular types of traffic arbitrage:

• Search to Search

This involves using different search engines – for example, Yahoo! and Google, or Google and Bing, for example. An arbitrageur buys a cheaper keyword from one search engine and directs a target audience to another engine for either the same, or very similar, but more expensive term.

• Display to Search

This type of arbitrage includes banner ads. An arbitrageur buys traffic and then redirects it to more expensive (usually CPC) search results. 

• Native to Search

An arbitrageur purchases cheaper, native traffic on platforms like Outbrain, Yahoo!, Taboola, and then redirects the user to a keyword placed in the search engine like Bing, Google, or Yahoo.

• Social to Search

Social media clicks are typically much cheaper than keyword traffic for search engines, so an arbitrageur purchases paid social media-based traffic from platforms (usually Instagram or Facebook).

How much do arbitrageurs earn?

Arbitrage specialists have no limits on earnings. There are cases where publishers brought solid traffic and earned more than $20 000 in a couple of days.

If you are an experienced arbitrageur, understand advertising formats and know how to set up ads, you have all the chances to make good money on traffic arbitrage. The logic behind the work is simple – the wiser you invest in advertising, the more you can earn.

Summary: what kind of mistakes do arbitrageurs make?

• Starting with big budgets

Beginners think that they can earn a lot at the very start, but then find out that the rewards do not recoup the costs of advertising. That’s why it’s better to start with smaller budgets, test different marketing channels and choose the ones that bring the highest conversion rate. 

1. Using one traffic source per offer

Test different traffic sources and try to run in different marketing channels. Using one marketing channel you won’t get the full picture: where the target audience resides and which channels bring the most conversions.

• Using weak CTA

If you don’t call users to action, if you don’t motivate them to click on the link, they are unlikely to be interested in the ad. The ad should cause an immediate emotional response from the audience. Ideally, the ad should intrigue, and the user should not just click on it, but also take a targeted action. 

• Using uncatchy/low quality creatives

Low resolution or too boring pictures, bad graphics, screwed up layout – these are the mistakes that cost you profit. A user will immediately notice this and ignore the CTA. To drive traffic effectively you need good quality creatives. Take pictures from photostocks, edit them in graphics editors, do whatever it takes to look professional. 

Overall, traffic arbitrage can be highly profitable, and millions of arbitrageurs make money on it, but you have to be patient when taking first steps, test your ad campaigns, avoid trying all possible niches at once and of course choose the affiliate programs from reputable advertisers, and we at Indoleads have plenty of them.