CPM Arbitrage vs. Affiliate Marketing. Is Arbitrage Alive? (16)
I’m new to the forum and have spent the past two weeks reading up on affiliate marketing and working on landing pages. I’m a stay at home mom with a background in the corporate world so it’s a very different ball game for me from my previous gigs, but I’m really excited about the opportunity.
That being said, for the past two days my “studying” has been derailed by a conversation I had with a gentleman in the airport lounge at SFO a few days ago about internet marketing and in a nutshell he told me I was wasting my time with AM (time/reward ratio skewed) and should be in the cpm/click arbitrage game. I was looking for some opinion or commentary from members here since the knowledge base here is huge. Here’s the gist of our conversation :
- Pulls in over 100k a month in profit from his portfolio of arbitrage sites.
- Traffic is from legitimate sources, not bots. (Swore there was nothing blackhat about his traffic sources) I pressed him for his sources he said he uses a few but that Trafficvance was one of them
- Said his traffic averages around $.005 per click for text ads
- Sites are only 15 months old
- Showed me his GA account – bounce rate of 30%, 2 page views per visit, 2 minutes spent on site
I visited his sites and using Ghostery I can see that he utilizes several ad exchanges, OpenX, Svorn to name a few. He is also with some solid ad networks like Tribal Fusion and Outbrain amongst MANY others.
I can’t stop thinking about how he does this arbitrage thing. I’m really intrigued and have probably wasted too much time on google and other IM forums researching this. He was really knowledgeable and as unbelievable as it sounded, I did and actually do believe him.
So my questions are:
- I’ve looked at multiple traffic sources and can’t for the life of me figure out where the cheap clicks are coming from other than bots. Or is he buying so much traffic that he is able to negotiate discounts? Does this even happen, especially with companies like Trafficvance?
- Looking at similarweb.com it looks like his traffic is coming from and going to the other sites in his portfolio. Seems like bot behavior to me?
- Based on all the articles of late, especially this recent one in Bloomberg, are ad networks really turning a blind eye to fake traffic (if it is indeed fake/bot traffic)
- Does anyone in the forum actually do this click/cpm arbitrage thing or know anyone who does this. Is this just fairy tale legend or are people actually doing this successfully?
I’m a really hard worker and not looking for a blueprint on how to do this, but if this is really something that can be done (that's not totally blackhat) I am game to try to crack this nut. I just want to know if it is worth the time and money to explore how to do this and test some options out to see if this can work in addition to doing AM. AM definitely seems like there is longer term success whereas my impression of the arbitrage thing is “ride the wave while you can”. Thoughts?
This is exactly what I'm working on. I have nothing of value to provide because I'm still a newb but I can tell you that I've gotten consistent $0.00X clicks on facebook. I'm starting testing traffic from twitter.
monetizepros.com/display-advertising/cpc-arbitrage-what-it-is-and-how-to-pull-it-off/
Wow that's great that you can get such cheap clicks from FB. I haven't been able to get it down to that cost. The other variable to to this arbitrage thing is the CPM/selling the traffic component. Even at a penny a click, you need pretty decent CPM's for the ads and from what I can glean, it takes awhile for the site to optimize in order to get a $2+ CPM if it even gets there at all. I put together an excel spreadsheet so I could play with numbers easily and it just seems like the margins are so razor thin combined with the traffic costs and CPM prices being so variable, it makes me nervous. This guy seemed like he had it down to a science, but it seems like most of the arbitrage operations are using an ad exchange anyways which takes the guesswork out of half of the equation I guess? Good luck with your journey!
i know there are some Wall Street quant-type guys making 7 figures monthly doing this...
Traffic arbitrage is a real deal.
Watch this video: https://www.youtube.com/watch?v=O1Nn9m5LWC8
It's somewhat related to your question.
Just a couple points.
First of all, 100K a month really is not that much in the big scheme of things.
Secondly, arbitrage is a word that is used and misused by so many people that it has pretty much lost its meaning.
- Inter-exchange arbitrage. Multiple ad exchanges and traffic sources exist. As the supply and demand vary across exchanges and traffic sources for the same user types or targeting rules, there exist possibilities to buy with a bid of A on one exchange and sell at another exchange or trafffic source as with a bid for B. For the arbitrage condition to hold B > A + TC(sub A) + TC(sub B) where TC represents the transaction costs of buying and selling on various transaction sources.
- Forward Rate (Guaranteed Ad Delivery) and Spot Market (RTB) Arbitrage: Many publishers and DSPs offer buyers the opportunity to buy set traffic or advertising in advance usually in bulk for fixed “preferential rates” from private marketplaces. A seller can thus buy traffic in advance at a set price, and then later charge buyers for this traffic at spot market (real time) prices.
- Publisher volume I/O arbitrage. A publisher can purchase traffic to her Web page and subsequently make more from ad revenue than the initial inbound click cost. This is the basis for a lot of the crap "content" sites that litter the web.
- Pricing scheme arbitrage. Even in a pure RTB setting, different counterparties will have different preferences for structural pricing schemes based on their specific risk return profiles. For example, most publishers prefer to sell traffic on a purely CPM basis in RTB auctions. Pricing scheme arbitrage occurs when an agent can identify situations where the CPM cost to acquire a user conversion is less than the CPA payoff for the conversion.
Thirdly, if anything mainstream platforms are getting more stricter than ever before on traffic fraud.
Fourthly, like in many parts of affiliate marketing, there is a great majority of the players who are doing traffic arbitrage at a low scale, and a very small number who are doing it on a massive scale.
In order to play in the latter game, unless you are deeply familiar with mathematical concepts like Euler-Langrange conditions, FTRL greedy algorithms, partially observable Markov decision processes, as well as all the first order (delta, theta, vega, rho, lambda) and some second order Greeks (especially gamma) of Modern Portfolio and Options Pricing Theory, and you can implement your algorithmic trading in a very high speed, high frequency setting, you will get most likely killed.
Originally Posted by cmdeal
Originally Posted by cmdeal
<<click meSo yea i just struggled to buy bread, motivational quote of the day ^^
Originally Posted by erinzini
Great thread, thanks for everyone's input!
100k a month might not be the biggest but it sure as hell isn't anything to sneeze at. 3k profit per day is a nice chunk of change, especially on something that is fairly consistent, pretty hands-off, and once you know your metrics, easy to scale. It has probably been the easiest money I've made online, but just the approach and plan of attack is completely different from your standard Affiliate camps. To be honest, it's boring and slow, and a pain to manage, but the money is definitely there.
We don't call it arbitrage because it's not that, it's a Content site, and in our case a Niche Content Site. We're not just buying media for cheap and hoping to have our RPM's higher then our CPM's. These "arbitrage" sites are getting harder and harder because people are just littering their site with ads, from shitty networks, and hoping to just drive users to their site the cheapest way possible.
You take the typical "affiliate mindset" approach to these sites and you will fail. You can't just rip an idea/template/ad/fb page/etc.. These sites (today at least) require a quality user experience, quality content (for the demo you're after), and a sound financial plan to manage them.
If you're new to Internet Marketing I wouldn't suggest this be the first thing you do for the main reason that the cashflow is extremely slow. Even if you're profitable month 1, you won't be able to withdraw any of your profits until at least month 4 - 5*.
Google Adsense can and will be a pain in the ass, and programming issues with Wordpress will almost always come up (hacks, slow load speeds, plug-in issues). So be well versed in both areas (Google & Wordpress).
This is definitely a good project to take on, but really depends on what your goal is. Ours is to sell it... something we've never done before but are learning as we go with how to do it.
TLDR;
It's a great project, but it's slow to build up, slow to take out money, and has a lot of moving parts. If you've never bought any media, written any copy, done any programming, don't have cash to last you at least 6 months... it might not be smart to make this your first/only project.
Originally Posted by Adamw
You should definitely drop here on this thread http://stmforum.com/forum/showthread...e-from-scratch and share some of your experiences and advice with the OP who seems great intentions and motivation, but in my view could definite benefit from some guidance.
Originally Posted by cmdeal
^^ Yep this was what i was referencing.... its almost like high-frequency trading but for CPM instead of stocks.
Originally Posted by cmdeal
What kind of portfolio of sites (how many diff domains, min. vol) do you have to have, to get direct access to an exchange? Are there any others besides appnexus and openx?
you can start off with one site. volume of 10m imps / month should be enough.
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