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Blogs » Archive for May 3rd, 2007
Making Money With Arbitrage
When I first heard about arbitrage I thought someone was getting a divorce. I’d never heard of arbitrage to describe a market condition. The basic idea of arbitrage is simple: take advantage of a disparity between the cost of one item and selling it a higher price in another market where it fetches a higher price. A very contemporary example of arbitrage is when the XBOX 360 hit stores at retail price and were selling for 3-6 times that on eBay.
But that’s not what people mean when they talk arbitrage on the web. The most common example is Contextual Ad (CPC) Arbitrage in which you buy traffic at a low price and direct it to a page with contextual ads, optimized to convert, where the ads pay a higher price per click. Lets run through an example:
You do some digging on the popular Contextual Ad networks like Google Adsense, Yahoo, MSN etc. and find that “Firstime Home Loan” is paying pretty well. Say around $0.75 per click. Lets say you found this through Google Adsense. Looking on Yahoo or MSN you find that they are going for $0.55 per click. While most examples may not be this obvious or …
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