Supply chain · also called arbitrage, media arbitrage
Traffic arbitrage
Traffic arbitrage is buying cheap visitors, often through native, social or search ads, and sending them to pages loaded with ads that earn more than the traffic cost.
Arbitrage means profiting from a price gap. In ad tech, the arbitrageur pays, say, two cents per click for visitors from a content recommendation widget or paid social ad, sends them to a page with many ad slots, and earns three or four cents from ads shown during the visit. The margin is the profit.
The practice is the business model of most made-for-advertising sites. It is not automatically fraud: the visitors can be real humans. But it creates low-value inventory: visitors arrive via clickbait, see a wall of ads, refreshing slots and slideshows, and rarely engage. Advertisers pay for "human" impressions that do little. Arbitrage also blurs into fraud when purchased traffic comes from bots or sourced traffic vendors of doubtful quality.
A second meaning refers to intermediaries who buy impressions and resell them at a markup within the programmatic chain, and to agency principal-based buying. Search arbitrage is a specific form using search ad feeds.
Think of it like this
Traffic arbitrage is like paying people a small fee to walk through a corridor lined with billboards, and charging advertisers more for the billboards than you paid the walkers.
An example
A site pays US$0.03 per visitor via native ads. Each visit views 5 pages with 6 ads each at US$1.20 CPM: 30 impressions earn US$0.036, a US$0.006 margin per visitor at scale.
Related terms
Made-for-advertising (MFA) sites
Made-for-advertising (MFA) sites are websites built mainly to generate ad revenue, typically with thin content, heavy ad density, fast refreshing ads and traffic bought through arbitrage.
Sourced (purchased) traffic
Sourced traffic is website or app visitors that a publisher buys from third parties, such as ad networks, content-recommendation widgets or traffic vendors, rather than attracting them organically.
Content recommendation widget
A content recommendation widget is a block of sponsored and editorial links, often under an article, that recommends stories or products and earns money when readers click the sponsored ones.
Search arbitrage
Search arbitrage is buying cheap traffic, often from social or native ads, and sending it to pages that show search-style ad links, earning money when visitors click those links.
Ad refresh
Ad refresh is replacing the ad in a slot with a new one while the user stays on the same page, triggered by time, scrolling or user actions, to create more impressions.