CPA Arbitrage; What on Earth Does it Mean?
Simply put, arbitrage stands for an effort to profit from a price difference of an action taken on different markets or platforms. In the case of CPA arbitrage all it means is that you, the affiliate, act as a broker buying traffic (example: search engines) for one price then selling it back — in the form of leads — back to the network for a higher price. Confused? Don’t worry it is simple:
Let’s assume you are promoting a CPA offer. You go out there, buy traffic for that particular offer and get it converted for less money than the offer pays. If you are successful in doing so, you earn the difference between what the network pays for that lead and the price you paid to get that lead (conversion).
Here is an example: An X offer pays $5.00 per lead. You launch a PPC campaign and buy traffic for, let’s say 0.25 cents per click. Now let’s assume only 1 out of 10 clicks converts. What is your cost per conversion (lead)?
Cost per conversion: 10 clicks @ $0.25 ea. = $2.50
Your Profit: $5.00 – $2.50 = $2.50
Here is what you have done: You took an offer that pays $5.00 per conversion. You purchased traffic and got a conversion that cost you $2.50. That conversion (lead) you sent (sold) back to the network that paid you $5.00 for the trouble. That is exactly what CPA arbitrage stands for; profiting from the difference between the purchase and sell price on two different markets.
Whether they know it or not, all affiliates who promote CPA offers are traffic brokers. They buy traffic at a certain price and sell it back (in the form of a lead) for, hopefully, a higher price. They all engage in CPA Arbitrage. The idea here is to purchase (traffic) low and sell (leads) high. To maximize your profits you must find ways to pay as little as possible for your traffic. PPC is only one of many other approaches you can take to promote CPA offers. The smart affiliates go way beyond paid traffic. They go where traffic is free.
By: D. More
Tags: CPA Arbitrage
