What is CPA Arbitrage ?

by kirtok on December 9, 2008

in Affiliate Marketing 101

Important Update: This post is the 101 information about CPA Marketing, also known as CPA Arbitrage. I see many visitors coming to this page to look for more information about an affiliate marketing course called “CPA Arbitrage”. If you are looking for further information on this course, please visit this link. If you are here to learn more about CPA Arbitrage, and CPA Affiliate Marketing, please keep reading below.

Let’s Start with the definitions of CPC and CPM

In online advertising, widely known two advertising methods are CPC (Cost Per Click) and CPM (Cost per thousand impressions). In the CPC method, advertiser pays a fixed or variable $ amount per each click its site receives. In the CPM method, advertiser pays a set or variable $ amount per 1000 impressions its advertisement (banner, contextual, etc.) is shown regardless of CTR (Click Through Rates).

There are many advertising venues in the market which sell both CPC and CPM methods, some to name; Google Adwords, Yahoo Search Marketing, MSN AdCenter, etc.

What is CPA ?

Compared to CPC and CPM methods, CPA is a newer advertising model. CPA is called “Cost per Action” or “Cost per Acquisition”. In the CPA method, advertiser doesn’t pay for the impression or click. Advertiser pays when an action is taken by visitor. Here are some popular CPA advertising offer types:

  • User registers for the website/service (free or paid).
  • User buys something (also called as CPS, cost per sale).
  • User fills a short form (short survey, email, zip code, state, etc.)
  • User fills a long form (insurance quote, long survey, school information, etc.)
  • User registers for free trial (blockbuster, email marketing software, etc.)

Depending on the offer type advertiser sets a fixed $ amount per action. Advertisers either run an inhouse affiliate team and program or go to affiliate marketing companies.

In a higher level, affiliate marketing companies are the ones doing the CPA Arbitrage. But, affiliates also known as affiliate marketers sign up with affiliate marketing companies and promote the offer. Let’s show this with an example:

Blockbuster would like to do a CPA advertising campaign. They are ready to pay $80.00 per “free 30 days subscription”. Since they have the historical data on how 30 days free subscriptions work, they are happy with the amount they are willing to pay. They will win in this situation. (p.s. $ amounts are not related to blockbuster, they are given as an example).

Blockbuster doesn’t want to deal with every average Joe (this is a regular affiliate marketer). Therefore, bigger affiliate companies go to Blockbuster and promise certain level of volume (subscription numbers). Before or after going public with the offer, these large affiliate companies offer these offers to smaller affiliate companies with a lower payout (see the CPA arbitrage starting).

Here’s a quick diagram I’ve drawn to visualize the CPA arbitrage in general:

This is a very general diagram to show the CPA arbitrage in affiliate marketing. Depending on the vertical or niche, this diagram might change. For instance, in debt consolidation niche, same lead could be sold to different companies (unsecured debt, less than $10.000 debt, etc.)

I don’t want to get into details of CPA or affiliate marketing in this post since I want this post to be a clear definition/explanation of CPA Arbitrage.

Why did I need to write a post about basics of CPA Arbitrage? Because many beginners want to learn the basics of affiliate and online marketing. And I’ve seen many experts use the phrase “CPA Arbitrage”, but talk about totally different things.

If you’d like to test some CPA offers, I’d recommend NeverBlue, and Azoogle. These are two of the most reputable and trusted affiliate marketing networks in the industry. They have tons of offers from free zip submits, to CPS type offers, and they have one of the best tracking systems (which makes the beginner affiliate marketer’s job easier).

If you are a hard worker, if you love to test and track, CPA Arbitrage might be the best opportunity for you in the online world. Many online marketers, including myself, are making great amount of cash every day with CPA Arbitrage.

If you are new and interested in getting into affiliate marketing, here are some posts I’ve written about affiliate marketing with newbies in mind.

I hope these posts will give you some basic direction about setting up your success mindset in affiliate marketing. If you put some hard work into it, affiliate marketing is the most rewarding and fun thing in the world. Good luck!

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{ 8 comments… read them below or add one }

Ertuğrul Kılıç December 15, 2008 at 6:11 am

Ahmet Bey Merhaba,

İngilizce yazacaktım ama abesle iştigal olur düşüncesiyle Türkçe yazmamın daha uygun olacağını düşündüm.

Vermiş olduğunuz bilgiler için teşekkürler.

Yukarıda tavsiye ettiğiniz her iki programada üye oldum.CPA ile ilgili olarak başka denemiş olduğunuz ve tavsiye edebileceğiniz programlar varmı acaba ? Bu tür programlardan birine paramı kaptırmıştım, ödememi alamadım malesef.Onun için tecrübe ettiğiniz programlar tercih nedenim olacaktır.

Saygılar.

Reply

TurkDN.com January 4, 2009 at 9:44 am

I am curious about your thoughts on arbitrageconspiracy.com. It seems like a “make easy money online” scheme, and to be honest it looks like a scam to me, but after reading your post the offer seemed more valid.
Does CPA arbitrage really work? Does it worth to play around with?
Many thanks,
Ataol

Reply

admin January 4, 2009 at 2:59 pm

@Ataol, to be honest I’m a not a big fan of arbitrage conspiracy type of programs.

I wasn’t in Vegas for the launch, I’ve heard about it from many online marketer friends.

Personally, I’m not buying it. Therefore I wouldn’t tell you to buy or not to buy the program.

Here’s an interesting read though, before you make your decision: http://blog.seorevolution.com/2008/12/10/dont-buy-the-arbitrage-conspiracy-i-was-there-in-vegas/

Good luck.

Reply

Newbie Affiliate Marketing & Paid Survey Advice February 15, 2009 at 7:47 pm

Affiliate marketing is IMO the #1 way to make a living online. But you have to treat it as you would any business. It takes hard work and long hours. Nothing will come overnight. Probably the key thing you have to do is find your niche and go with it. After that you should be on your way. Nothing feels better than when you make that first $1.00 online. Esp when you have failed to make a penny in the past.

Reply

Chad April 30, 2009 at 12:12 pm

I may be a bit biased, but I think CPA arbitrage is a great way to make money online. My reason for saying so is because it has many of the benefits of doing business online without the headaches (such as customer support, inventory, product fullfilment, etc.). I’m even offering a bonus for a product called CPA Arbitrage that was recently launched to give people an incentive to learn more about affiliate marketing for product vendors who pay per action as opposed to per sale (or other).

~Chad
Founder, NicheRichMarketing.com

Reply

Nick January 6, 2010 at 11:21 am

Hi,
It does seem to be a great post, specially for newbies like me. Well, I will further appreciate if you can name some of the sites for a newbie like me to try CPA offers. You said Neverblue and Azoogle are to be avoided, so which ones are to be used? Thanks in advance.

Reply

kirtok January 6, 2010 at 2:21 pm

Nick, I said; I’d recommend Neverblue & Azoogle. They are 2 of my favorite affiliate networks. I didn’t say avoid.

Reply

Kamrul Hassan July 4, 2010 at 1:05 pm

Do I need a web site in order to earn more in CPA business? Can I do this CPA business with wordpress blog? Can I set the offer from CPA network on my blog and then invite traffic to put their info and send them free stuff? Can I do like that?
Would appreciate for your valuable replies.

Reply

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