Traffic Arbitrage to beginners. You’ll need a clear understanding of the fundamental concepts and metrics behind any successful online ad campaign. Fortunately, you can skip a few classes by taking another look at the rudiments of this particular language right here.
The Media Buyer’s language revolves around two things: efficiency metrics and profit. And, since time is money, don’t expect the media buyer to express himself with long and elaborate words.
Indeed, the jargon of a media buyer hardly ever exceeds 4 letter words: CTR, CPM, EPC, etc. That’s not surprising since if you want to land profitables campaigns by buying ad space and monetizing it, you need to start feeding from your data.
The quicker you catch on to these acronyms, the faster you’ll earn money! Here’s a breakdown of the main ones.
Incomes – Coming down the pipe, right to your pockets
We’ve already said it, but the media buyer’s main focus is PROFIT on CPA Networks or any other programs. These money-making pros have such a great grasp of the jargon, the following terms and acronyms are always rolling off their tongue:
PPS: It means Pay Per Sale. When you promote PPS offers, you usually earn more money for each individual sale, but they usually have a lower conversion rate than PPL offers, as they typically require the usage of a credit card. These offers are among the best ones for highly qualified traffic.
PPL: A Pay Per Lead offer is an offer where you get paid each time a user makes a defined action. For example, you can get paid each time a user signs up for free or fills out a form.
A reason why PPL offers allow you to earn money faster on Traffic Arbitrage with Affiliate Programs, especially when compared to PPS. However, PPL typically pays less each action. Furthermore, these offers usually have their CPA closely monitored by the provider because they are easily hacked with false traffic.
Remember, PPL is a calculated risk arrangement for a sponsor. It’s closely related to aspects of CPA that we’ll examine below. We’ll make it short and sweet by telling you that the “free” to “paid” ratio matters. If the free leads you’re getting paid good money for aren’t converting on the sponsors end (to paid members), well, enjoy the PPL opportunity while it lasts.
Let’s explore the other methods of earning:
PPC: Pay Per Click or EPC – Earning Per Click means that you get paid each time a user clicks on the ad or the sponsored link. It’s by far the fastest way to earn money! However, the amount you earn per click is among the lowest gains you’ll probably see in this market.
RS: Revshare (RS) means that you get a percentage of what your user spends. This never expires and the user is referred by you forever.
Read this "How to find the best affiliate marketing niche".
CPM vs. CPC vs. Bid vs. Flat, what should I buy?
Traffic Arbitrage to beginners. Last week, we talked about getting traffic. Unfortunately, traffic usually comes with a bill, especially in the media buying world. So, you best get used to the following terms if you want to negotiate this bill downwards!
CPM: It’s the Cost Per thousand (Mile) impressions. In other words, it’s the price that you pay each time your ad has been seen 1 000 times.
CPC: This is an acronym for Cost Per Click. It’s traffic where you pay for every user who clicks on your ad.
Bid: This is the Bid price. Media buyers and advertisers alike, determine the maximum amount that he or she is willing to pay for certain traffic. This may result in trickier calculation methods, and if you’re far off in your estimates, you could lose a lot of money this way.
Flat: Flat rate buys are typically reserved for the biggest media buyers out there. It consists of a fixed monthly cost for a large volume of traffic (or for a good ad spot). But remember, you need to pay the right price, and that requires a very accurate evaluation, usually done by testing the spot for a few days BEFORE signing on for a month. Don’t get caught up in overpaying for a spot that just doesn’t deliver on the results.
Payoff – Key Performance Indicators for measuring success
Traffic Arbitrage to beginners. Once you’ve earned and spent some money, it’s time to put things in perspective and calculate your campaign’s return on investment (ROI).
Here’s how we achieve this:
CTR: The Click-Through Rate, uttered in percentage, refers to the number of clicks related to the number of impressions. For example, let’s say that 2 people clicked on your banners out of 100 impressions. This means that this banner has a CTR of 2%. The key is to always broadcast the highest CTR banners to get more traffic and, eventually, more conversions.
eCPM: It’s the Effective Cost Per thousand (Mile) impressions but it’s used to determine your earnings per thousand impressions. First, you need to divide your earnings by your number of impressions. Then, you multiply this number by 1000 to bring it back to your CPM. This is very useful for your final profit or loss calculation and we’re gonna show you how to do this in next week’s post.
EPC: This term is way easier to comprehend than the previous one. The Earnings Per Click is your earnings divided by the number of clicks your ad received.
CPA: Cost Per Action is also referred as Cost Per Acquisition — As you might have guessed, this is the backbone of the CPA-based advertising model, where the advertiser determine how much is worth every conversion made. In this case, a conversion can be a click, a lead, a sale and so on…
For example, let’s say that your ad was clicked 500 times and that you were paid $1 for each click (Don’t get too excited, this example isn’t too realistic in real life).
Traffic Arbitrage to beginners. In this example, the provider is reporting that you made $500 in new revenues. The CPA is calculated by dividing this number by the number of conversions (“sales” for example) generated.
ROI: The Return On Investment is essentially the money you earned minus the money you’ve spent. In other words, your gross profit.
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