People on the forum were discussing approaches to traffic arbitrage, and a post by Finch about where he would start with $5,000 came up.
I decided to write down my take on it. Traffic arbitrage has always been an interesting way to start making money outside your day job. I always put the minimum starting bankroll at $3,000–$5,000. Yes, in some verticals, with a certain amount of luck, you can start with less, but that would be exactly that: luck. You can also try starting in the Russian traffic-arbitrage market, but I can’t advise you there—I don’t work with Russian traffic. Also read why almost everyone keeps failing at traffic arbitrage (in Russian).
On the one hand, I see the Russian market as a fairly easy place to turn a small profit.
On the other hand, it’s a very cramped, hectic market where special terms (discounts, exclusives) and access to a large bankroll decide everything. Below I’ll mainly be talking about Western traffic arbitrage, mostly mobile.
Ways to Get Started in Traffic Arbitrage
There’s a little about the approaches here, and more here. The forum has a lot of detailed discussion about approaches to getting started.
In short, there are extensive and intensive approaches. The post about choosing lots of approaches or lots of offers touches on this to some extent.
Extensive means trying everything; intensive means precise work with a limited number of traffic sources and verticals. I prefer intensive.
People mistakenly think extensive is the only possible approach for beginners.
They think that because a beginner starts trying lots of traffic sources and lots of offers and calls it an extensive approach. It isn’t. Extensive is one of the fairly successful approaches, but also one of the very, very expensive ones.
You are using an extensive approach if:
- You burn through five- or six-figure sums of dollars while “trying lots of traffic sources and lots of networks”
- You have several employees
- You have a clear description of every step in your testing process, success criteria, and at least partially automated testing
If even one item doesn’t match, don’t kid yourself: you’re just burning budget. It has nothing to do with an extensive approach.
Yes, of course, on a small budget a beginner will have to try several networks and several verticals. This isn’t an extensive approach. It’s nothing more than live-fire training and buying experience. Don’t expect profit at this stage. After this small-time messing around, you need to focus and start making money.
Which verticals work great right now:
- CPI (utilities, games, local and/or niche apps)
- Mobile content (pin submits), with a pile of subverticals (AV, WhatsApp, adult dating, “win some crap,” etc.)
- Lead gen (vouchers, dating, finance, local services)
- Pay Per Call (brokers, local services)
Finch gives this order for where to start, by difficulty:
- CPI
- Pay Per Call
- Lead gen
- Pin submits
I can neither argue with nor agree with this order. My view is that starting is roughly the same in any vertical. What matters is understanding its quirks, the learning curve, what to prepare for, the potential, which traffic sources to use, and how to choose an offer in that particular vertical.
CPI offers
Here are the headaches in CPI:
- The regulations are stricter than with pin submits; I wrote about that recently
- Caps
- Quality metrics are still not very transparent, though the market as a whole is moving in that direction
- Most CPI offers have a short life cycle. Worldwide utilities live the longest. Games live shorter lives. Local niche apps, shorter still. There are exceptions.
- CPI games are one of the hardest verticals
- Advertisers are often insane
If you know how to live with that, or have access to exclusive offers, CPI is actually a viable place to start.
The Russian CPI market has a special place. That means working with Target.Mail.ru + VK. More on that below.
The upside:
- White-hat promos: you can run them on (almost) any network.
- With worldwide utilities, low payouts = cheap testing.
- Again, with worldwide utilities, a long life cycle. Months, at least. Because there are so many geos.
Pay Per Call offers
A hard vertical if you want decent volume. For small volume, the setup cycle is too long and complicated, and you need an extremely good understanding of local markets.
Yes, if you’re a US citizen, it’s several times easier for you to promote insurance and plumbing services. You use them yourself and know exactly how and what people search for.
On the other hand, if you have white-hat AdWords experience, you absolutely can start with this vertical.
Mobile lead gen
Mobile lead gen has a lot of different things in it. For example:
- Classic finance, which has never been easy.
- Dating. I’d say it’s one of the hardest verticals ever. All the fun of CPI caps and quality, hellish competition like pin submits or adult, lots of prep work, and an especially bad creative-theft problem. On the other hand, you can start at small volume and in uncompetitive geos.
- Vouchers. The cream has already been skimmed off this revival cycle. The vertical has been burned out until it’s as hard as pin submits. I wouldn’t recommend starting here; you need fairly complex approaches to get it consistently profitable.
Overall, lead gen is pleasant to work with. Long life cycle, almost every network (except AdWords and Facebook) is friendly to it, much less dependence on traffic type in terms of connection speed and OS, and often plenty of room to get creative with approaches.
Mobile content — pin submits
Hellish competition, lots of misleading creative, risk of nonpayment, expensive geos, and all the joys of getting carrier traffic. On the other hand: cheap geos, stable verticals (not offers), high profitability. You can start here; in my view it certainly isn’t any harder than starting with CPI.
Overall, a beginner’s offer choice depends on cost per lead. Obviously, it needs to be low. Usually you should choose offers paying no more than $2–$3, though that doesn’t guarantee a low cost per lead. As a rule, avoid premium countries: US, CA, AU, Central and Western Europe, the Nordics.
Traffic Source Types for Starting Out
Display networks and RTB.
- Lots of networks
- A wide control spectrum: from “I control nothing and see nothing” to “I control everything and see everything”
- A very wide traffic-quality spectrum: from “shitty bots” to “a 1:2 CR”
It’s hard to recommend anything specific here. It makes sense to pick one RTB network and learn it inside out with the whole budget. You can add one or two more networks. Pretty soon you’ll know exactly which placements you need.
Redirects, popunders, clickunders, PPV, and so on.
The basic principle of this format is covered separately: what PPV traffic is (in Russian).
- Fairly low-quality traffic
- You need a very good understanding of its quirks
- Hard on hardware (you need a good dedicated server)
- Demanding about landing-page quality, both in the approach and in the technical execution
- Sometimes you need special techniques for an early read on traffic quality
- A long learning curve
Overall, you can make almost anything work. Pin submits and lead gen are easier to make work than the other verticals. On adult traffic (surprise!), adult dating works well (in Russian).
Testing moves briskly because of the large volumes of cheap traffic (in Russian), though that doesn’t mean it’s easy to learn. Learning to work with redirect traffic and get decent volume out of it is hard: specialized work with placements, very obvious bidding wars, and a ton of details around approaches.
AdWords and Facebook
Although these are completely different traffic types and require different approaches, they have the following in common:
- Huge amounts of traffic
- High and very high traffic quality
- Powerful targeting and analytics tools
- Very opaque traffic delivery
- It’s very hard to configure campaigns so they work well and turn a profit. There are a few exceptions, but they’re gray-hat.
- Bans, bans, bans
- You need cloaking and a huge number of accounts. Even if the verticals look white-hat to you personally. For example, even with a squeaky-clean CPI utility setup, you will get banned. Almost always on AdWords; always on Facebook.
Not for beginners. If you have a spare $30,000–$50,000 (which you’ll probably burn at a loss), ready-made approaches, a strong cloaker, technical infrastructure, access to accounts, and an understanding of two or three verticals, then it makes sense to scale on AdWords and Facebook. If you don’t, you’re better off drinking away the $3,000–$5,000. At least you’ll get some fun out of it.
My old post: How to Work with Facebook. Part 1
Target.Mail.ru + VK
This is a special subject. In my view, it isn’t exactly traffic arbitrage. For large volumes you need:
- To know how to work with the traffic source: industrial-scale work with creatives and targeting, an understanding of traffic delivery, and so on
- Discounts
- Exclusive offers before they go public
- The ability to react very, very quickly
For most small players, Russian CPI means a very short offer life cycle, a fairly easy path to profit, and lots of fuss. There are a few large players who are doing great.
Useful: what you need to understand when buying ads on AdWords and Facebook — link
Adult traffic sources
Overall, everything that applies to redirect traffic and display traffic applies here at the same time, depending on which type you plan to work with. Mostly heavy competition. Creative theft is normal. Best to avoid premium countries. Otherwise, if you have some adult background, you can start there too.
The moral:
- All verticals work.
- Almost all geos work.
- All traffic sources work.
- You can start in almost any vertical except two or three especially competitive ones. And it will work out. Or not.
It’s all about the approaches and systematic work. If you couldn’t make it work, that only means you personally couldn’t make it work. Everyone else is doing great.