What is traffic arbitrage in advertising?
Traffic arbitrage is buying visitors cheaply, for example through social, native or search ads, and sending them to pages that earn more from ads than the traffic cost. The arbitrageur profits from the price difference. It is legal when disclosed, but it often produces low-quality, low-attention inventory and can hide bot traffic that buyers never intended to pay for.
Traffic arbitrage is the business model behind most made-for-advertising sites and some search arbitrage schemes. The operator buys clicks at, say, 2 cents each, and if the visitor sees ads worth 3 cents, the operator profits. The incentive is to squeeze in as many ad impressions per visit as possible, including through auto-refresh abuse and slideshows.
The risks are low attention, sourced traffic that includes bots, and opaque reseller chains. Buyers can spot it through high ad density, very short sessions and sellers that disclose a large paid-traffic share.