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Arbitrage in Online Marketing
Let's go to the point right away, what is arbitrage? Simply it's making people come to you through an ad or such and then 'luring' the visitors to do something desired to create profits for you. This is a simple principle named with classy word.
How could you do arbitrage with your website? Right now, I can see two methods:
1) People clicking your ads.
2) People buying something from you
Both of these require advertising or other things making people clearly coming to you because of it. This can cost to you or not, in real world stores would place advertisements in magazines to get people come and buy something still covering the costs.
If you advertise in AdWords, for example, you should create ads that give you extremely targeted clicks for extremely low costs. A dream? Perhaps, but I know cases where people make thousands of dollars every month thanks to arbitrage method. Select keywords that cost you just about couple cents but still are very targeted. Actually this is something we always want with AdWords but we don't have time or energy to do it.
Only the ads won't do it, you need a web page, not necessarily the whole website to be covered with high paying keywords. Not with spammy method but with natural spreading of them, you may be rewarded with high paying ads too, especially Google will do it. Try aiming for 5% - 6% keyword density while writing your article.
Ok, even that's not enough. We are trying to make the click-through-rate higher here now and one great way to do it is placing and modifying the ads well. Think which spots of a web page are mostly noticed, the middle center part, among the text and the part immediately after the text. There are others but I think those are the best ones. When I said ad modifying, I meant coloring the ad. Do you want them to be separated or to be blended in the website? It's hard to say which one is better, the only way to find out is split testing. More about split testing you website here.
Just remember that you really, really have to write quality content because not only Google will know that it's total crap but also the visitors will escape the page quickly.
Ok, let's say this again with less words. To create ideal arbitrage environment for your website, you must:
1) Get the best possible targeting/cost for your ads.
2) Choose high-paying keywords for you and write an useful article.
3) Place and possibly choose different colors for website ads.
4) Test it all over and over again.
So easy but so hard at the same time... let's take a theoretical example about very optimized arbitrage campaign. After reading it, you may get sceptical but it's possible.
Arbitrage Example
Your ad costs 2 cents per click and the ads on your website gives you 25 cents per click. Let us say that even 10% of the people coming through your AdWords clicks your profit ads, which is a rather great CTR but possible, one of the cases I read was about as high CTR as 50%!
We take a group of thousand people into this test. 10% of 1000 is 100 so they create you a profit of 100 x 0,25$ = 25$. The costs would be 1000 x 0.02$ = 20$ so you would create 5$ profit. Not very much money indeed but think, that's still 25% profit. You could raise the scale of your budget so the profits would be even higher.