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What is Ad Arbitrage?

What is Ad Arbitrage?

Can savvy and strategic marketers still make a mountain of money with advertising arbitrage in 2022? Find out now. There can be no mistake about it – we live in the middle of the most competitive business environment that has ever existed.

Today, it’s possible to build a (literal) global business entirely from scratch in a back bedroom, all in about 30 minutes or less, and start making sales that same day. We’ve never seen a business environment like the one created by the internet.

To succeed today, you have to be smart, you have to be strategic, and you have to stay two or three steps ahead of your competition.

That means taking advantage of more advanced marketing and advertising strategies like ad arbitrage.

What is Ad Arbitrage, Anyway?

The most important thing for you to understand as a business owner (particularly online) is that NOTHING happens in the world of business until something gets sold.

You could have the most outstanding products, the greatest prices, the best customer service and support, the fastest delivery, the slickest website – whatever – but if you cannot get customers on a regular and consistent basis, you aren’t going to make much money.

On top of that, the sooner you realize that the “old ways” of marketing and advertising online are dead and gone, the faster you are going to be able to jump aboard strategies like ad arbitrage.

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For those new to this strategy, ad arbitrage works like this:

Ad arbitrage is when you buy advertising online (PPC, banner ads, native ads, etc.) at a low price and then sell that asset at a higher price, pocketing the difference.

As a strategic business owner and marketer, you’re going to want to find ways to buy traffic for your site (or your landing page or money page) that costs less than the amount of money you’re going to make on each sale.

From here, you rinse and repeat the process as much as possible, using your proceeds to buy more advertising, which allows you to make more sales, which in turn will enable you to buy more advertising – and so on and so on forth.

How Does Ad Arbitrage Work These Days?

Now, you might be noticing that with an ad arbitrage approach, there’s not a lot of opportunities to make a pile of profit since you are rolling over all that money from your sales into more advertising and traffic to drive even more sales later down the line.

This is where backend offers, continuity offers, joint venture offers, and the like coming to play.

You’re using your front-end sales – usually, a lower dollar value sale to turn a stranger into a customer, first and foremost – to fund your marketing for more valuable offers.

Think about it like this:

The most expensive thing you’ll ever do in the world of business is getting a stranger to trust you with their hard-earned money, especially when you are a faceless entity online.

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By running ads (successful ads, hopefully), you’re able to gin up some traffic and convert them into paying customers by offering affordable, and front-end style offers that part all that tough to pull the trigger on.

It might take you five dollars worth of traffic to get a five-dollar sale, but as long as you keep rolling that money back into your ad arbitrage campaigns, you’ll be able to self-fund your advertising without having to infuse cash into campaigns all the time.

Then – after you have already established a relationship with your new customers and have sold them something they enjoy – you’re able to advertise and market to them (using the contact info collected during the first sale) without spending a penny.

All of a sudden, you turn that five dollars into initial ad arbitrage traffic into maybe a $49 (almost pure profit) info product, a $13 a month membership, or a multi-hundred or multi-thousand dollar “high ticket” purchase – all of which happens on the backend.

With this strategy, you are basically buying customers, but after the initial investment, you’re buying customers with money that new customers are flooding into your business.

After you get everything dialed in, you can start to rock ‘n’ roll and scale quite quickly.

How Do I Create Effective Ads and Campaigns?

This is where the rubber meets the road, and you need to make sure that you are focused on three core things to create outstanding ad arbitrage advertisements and campaigns above all else:

  • Your market
  • Your message and
  • How well those two match
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If you don’t fully understand your market and aren’t able to create exciting, engaging, and (maybe most importantly) inexpensive front-end offers that convert like wildfire, then ad arbitrage will be really (REALLY) expensive for you.

If, on the other hand, you understand your market back to front and also know how to create great offers – affordable, accessible, and easy to say yes front end offers – then you’re going to have a constant flood of money you can use in add arbitrage campaigns to knock things out of the park.

You always need to test, optimize, and retest different aspects of your campaigns.

There’s no such thing as a “perfect” ad arbitrage campaign, and there’s certainly no such thing as perfect advertising creative or advertising copy.

Every aspect of your funnel, every part of your campaign, and (really) every aspect of your business can be better tweaked, better optimized, and better improved for even better results.

Maintain this kind of mentality when you are putting together your first few ad arbitrage campaigns, and you won’t have to stress at all about the inevitable setbacks that come with this kind of customer acquisition approach.

Instead, you’ll recognize that if everything is a test, there’s no such thing as failure – you are merely accumulating new data points, new information, and new ideas to improve your business every time you roll out another campaign.

As long as you are looking at your analytics, paying attention to your key metrics, and tracking your arbitrage economics (money in versus money out) – combined with your lifetime customer value and backend profits – the sky is the limit with this approach.

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