Arbitrage refers to the strategic practice of capitalizing on the price discrepancies between different markets to generate a profit, a concept often likened to “flipping.” In a tangible sense, this might involve purchasing an item at a discounted rate from a physical retail store and subsequently selling it at a higher price point on an online platform.
In the realm of digital marketing, arbitrage manifests as the process of acquiring paid traffic at a low cost and directing it towards a website that is predominantly monetized through advertising. The primary objective here is to ensure that the cost incurred for acquiring the clicks is outweighed by the revenue earned from the ads displayed to that traffic. This technique, however, has been under scrutiny and subject to restrictions by major digital advertising platforms since 2007 due to concerns over its impact on user experience and advertising ecosystems.