This CPA arbitrage method has been around since I first used the Internet in the 1990s, except it wasn’t as developed as it is right now. This method is used to build lists of audience categorized based on detailed demographics, pushing the prospects through marketing funnels before they end up on a highly targeted mailing list.
I’ll explain it with an example so that it will be easier to understand because we all have seen this example. It’s the “free Walmart gift card” email that we all received in our junk mail folders. This free gift card is offered by many marketers trying to build a list of a special kind of audience. I’ll explain this in a sec, just bare with me a little.
The funnel goes like this:
An offer of a free Walmart gift card that appeals to a wide range of audience. The marketers hire CPA affiliates to get their offer in front of as many people as humanly possible. The value of the card ranges depending on who they want to target. Usually $50-100 gift card is used if they want to target realistic audience who will immediately spot the fraud in a $1000 gift card offer.
When a prospect responds to the ad they are asked an easy question that could be answered by selecting from multiple choices. This question is used as a shopping behavior classifier.
The prospect is then taken to a landing page that congratulates him/her for entering to get a free gift card and the landing page goes over the many “free” offers that could be filled by the participant in order to qualify for a free $50 Walmart gift card.
Usually the offers page has other CPA offers that pay anything between $12 and $30 for a free trail lead. Based on which offer the prospect will respond to they are classified according to their shopping interests and behavior.
So right off the bat the CPA arbitrage marketers are making money from those free trial offers on the landing page.
If they don’t respond to any thing they are taken to another set of offers that doesn’t require any credit card info (usually pays around $1-2 per lead).
Now the marketer has a list of people that he knows their demographics because before any cards could be sent to them they need to enter their shipping details. And here comes the interesting part.
The marketer has to deliver on the free gift card promise, or else. The FTC is waiting for any complaint and they will get the marketer no mater where he/she hides.
The offer page always has a fine print somewhere says that it’s a draw and the participants need to qualify for the draw by responding to some free trial offers. So once the prospect is done making the marketer some money already as a commission on generating leads for the free trial offers, they receive a message that they entered the draw advertised on the main free gift card offer page.
Do you remember the qualifier question at the beginning of this process of list building? This qualifier is an indicator of what the prospect might be interested in buying right now. And based on that they will be receiving emails promoting exactly what they expressed interest in. All of the other qualifiers are used to decide what offers to be sent to this particular prospect.
So the marketer built his/her own list using someone else’s offers to finance the list building process. Genius, isn’t it [grin]?