PPC Arbitrage

Summary:

PPC Arbitrage is essentially buying traffic from PPC (Pay-per-Click) traffic source, like AdWords, as an advertiser, and directing it to another PPC system (like AdSense) as a publisher. If you consistently make more money than you spend, you get PPC Arbitrage.

Name of the pattern:

PPC Arbitrage

When to use the pattern:

When you know very well what you are doing, especially how to get cheap traffic, how to ensure good click-through, and what to promote to get the sales and top buck.

How to use the pattern:

There are several ways to use this pattern. In the simplest barest form you buy AdWords advertising to advertise your affiliate link. This way you don't even need your own webpage. The prospects are sent directly from AdWords to the sales page.

Keep in mind, however, that many affiliate programs (most notably Amazon Associate program) prohibit such kind of advertising. So does Google too, if it finds an affiliate link in an AdWords campaign. As far as I understand, Google is not too forceful about this rule, you can have it for a few days, but eventually affiliate link in AdWords ad will be noticed and disabled. I don't know how soon, Google is very explicit about prohibiting that, but others (PPC Bully, Maverick Money Makers, Ryan Diess) report that a lot of people still doing that.

Other way to do PPC Arbitrage is to put a simple page or a small site full of AdSense (or other similar service) links and buy traffic to it from some advertising services (AdWords, MSN, Yahoo, etc.) This model is not prohibited by Google, and reported to work (CPA Ninjas) as long as you can get traffic cheap and sell it high. Often variation is to put CPA (ClickBank, CJ, MillNick) links instead of PPC on that site. This method was especially popular in early 2000s, when MSN traffic was relatively cheap compared to AdWords, and allowed PPC Arbitrage with MSN->ADSense scheme.

Attribution:

Unknown, but the idea probably evolved naturally with many people trying to make money on PPC and CPA links and trying to buy traffic to these pages. The term itself comes form a stock market arbitrage, where it means a combination of securities (stocks, PUT/GET options, others) that guarantees that the loss won't exceed some fixed amount known ahead of the deal.

Related patterns:

PPC, PPA, CPA

Related anti-patterns:

Flog

Details and comments:

Among other things, one type of behavior certainly does not work well with this pattern. Some people just buy traffic with AdWords, spend a lot of money, and then their sales don't cover their expenses. To the best of my knowledge, this is a very tricky pattern to master that requires knowledge and persistence. That's certainly does not look like a get-cash-quick for newbies. It is also not something to throw on top of existing business scheme. If you plan to use PPC Arbitrage, it has to be you main business specialization.

That said, there is nothing wrong for anybody to use this pattern at a small scale to TEST certain niches and affiliate products. In fact, that's one of the fastest ways to test affiliate products before investing significant effort into their promotion. See Ryan Deiss' "Million Dollar Napkin" system for one of the examples how to do that.