What is web traffic arbitration?
Traffic arbitrage is a business model in which you buy traffic at a lower cost and redistribute it to monetise it.
The person who buys and sells traffic is called a media buyer. This person redistributes traffic by buying it on one platform and selling it on another.
Example: You bought traffic in Google Ads for $100 and sent it to a page with a flight ticket search form, which generates $120 in income. The difference in revenue – $20 – is the profit from the traffic arbitration.
This is a simple example; in practice, everything is more complicated. You must continually experiment and always pursue the main goal – to spend less money on buying traffic than the income you will generate in the future.
How to begin earning on traffic arbitrage
First, you must answer 3 fundamental questions:
- Where should I buy the traffic?
- Where and how should I sell the traffic?
- What is the best process to use?
Each niche – such as travel, gambling and even dating – has different rules and strategies. Following, we look at the basics of arbitrage in the travel niche.
Where to buy traffic
In arbitration, you use the traffic that someone else generates. Therefore, you must decide where to buy the traffic, which traffic type to choose and how much to pay for it.
There are two types of traffic: cost and conversion. The Jetradar team’s own experience shows the following picture for 2019:
A low conversion means that only a few people made an action. For example, you sent 100,000 people to purchase travel insurance, and only 10 people ultimately bought it. In this situation, the conversion rate is 0.01%. In theory, the higher the conversion rate, the better.
However, you should evaluate the situation by looking to all – costs + conversion + revenue. A lower cost of traffic usually means a lower quality of traffic. For example, 1,000 people with click-under advertising costs 3-5 dollars while 1,000 people from the context costs a lot more.
Working with traffic that has a low conversion can be just as beneficial as working with traffic that has a high conversion. As mentioned, always consider all sides of the situation: how much you spend and how much you earn.
Before you start earning, learn the rules. Each product in Travelpayouts has its own traffic requirements. Learn the allowed traffic for:
In the vast majority of cases, advertising on the brand is prohibited. Also, spam isn’t allowed in any form (email, social networks, instant messengers, etc.). Like spam, toolbar and iFrame traffic is also not welcome in most cases.
In addition, limitations can apply to the traffic source. For example, arbitrage of Instagram traffic is difficult because an average user doesn’t have the opportunity to share the link. Restrictions must be prescribed in the rules of the advertising network, for example, the rules for using certain words, attracting attention, etc. Therefore, thoroughly examine the rules.
Where to sell traffic
Here, you must answer several questions at once. First, you must understand where you send the people – to your own project or directly to the advertiser’s site.
At first, this is your website (blog, White Label page, etc.) and in most cases, you are free to direct any traffic you want.
The second method is to direct traffic directly to the advertiser’s site. Here, there are already restrictions as mentioned above. You should always consider the requirements of the affiliate program, because in the event of a violation, the account will be blocked without the possibility of withdrawing funds.
Moreover, you must choose the product on which you will earn: flight tickets, hotels, tours, insurance, etc. Each product has its own rate. For example, each sold flight ticket receives a payout of 1.6% of the cost, while the rate is higher – about 5% – for hotels. For tours and insurance, the payout can be even higher – 10-20%. A full list of offers is available in your Travelpayouts dashboard.
When choosing, don’t rely only on the rate. Don’t think that the best offer is the offer with the highest commission. As a rule, a high commission means more expensive advertising rates (i.e., costs for you).
Try all the options, or at least a few different ones. Based on the results of a month-long test, choose the best one for you. Then concentrate on this option. Definitely try hotels, because this segment has a high margin: 4-6%. Plus, the average conversion rate is higher than that of flight or travel insurance.
In the case of arbitration of mobile traffic, be sure to verify that the product where you send traffic has a mobile version.
Try different types of traffic along with various offers.
Key features of the travel niche
While developing your project, you must consider two main features of the market:
- Low marginality;
- Long conversion window.
Low marginality in travel relates mostly to flight tickets, as you get 1.6% of the cost of the ticket price. In the “Tourism and Travel” category, finding higher rates is possible, too:
|Excursions & Activities||3-12%|
|Train tickets & passes||3-6%|
|Bike & Scooter rental||4%|
|Travel compensation||5 Euro|
When setting up an advertising company, it’s better to focus on deep segmentation and narrow targeting. To do this, use the statistics of search queries from the Google keyword planner.
Always remember the long conversion window. The effect of arbitration in the travel niche arrives in about 3 months. Don’t handle short-term events such as promotions of flight tickets, tours, etc. Because such proposals are short-term, in most cases you won’t have time to pay back your investments.
Advertise in specific areas, such as countries and cities of departure or arrival. You can prepare in advance and provide holiday advertisements, for example, about the New Year or Easter holidays.
Money can be made in arbitration in the travel niche. We and our affiliates have already learnt this. The niche has the capacity for new players, so you can also work with traffic arbitrage.
One of our success stories was when a new airline opened and we created an advertisement company for their flight directions. The ROI after 3 months was 213%.
Another successful strategy is to show ads to people who bought your service a year ago. On average, a person travels once a year. If longer than a year has passed since the last purchase, it’s time to offer the person a holiday again.
A fine idea is to segment flight tickets for specific destinations and retarget people who searched for air tickets earlier, but didn’t buy.
The more detailed your segmentation, the faster your investments will pay back. When setting up advertising, you will want to identify the region and select the most targeted keywords. Pay attention to detail and don’t be lazy about writing creative keywords for each word.
Another trick is to “land” users immediately on search results; don’t force them to search themselves.
Best tools to do traffic arbitrage in 2019
First, what you have to do to earn in the travel niche is join the Travelpayouts affiliate network. With us, you can earn on different travel services, such as flight tickets, hotel bookings and so on.
As a tools use:
Always try new tools and conduct experiments to find the best way to do traffic arbitrage in 2019.
Arbitration for beginners: the secret of success
In arbitration, you must always be conducting experiments. Start with experiments that focus on what and where to send, and end with a literal manual setting of advertising companies. If the platform where you take traffic allows you to conduct A / B tests, do it. For example, you can test the following hypotheses on your traffic:
- Will the strategy “grab it now because when it ends, it will be more expensive” work?
- Is situational marketing appropriate?
The secret of success is to constantly work and always conduct experiments. This is true not only for earning on arbitration of traffic in a travel niche, but for maintaining a high level of income.