Arbitrage

Arbitrage is one of the oldest ideas in trade. If the same thing sells for less in one place than in another, someone can buy in the cheap place, sell in the expensive place and pocket the difference. In textbook finance the two trades happen at once and carry almost no risk.

In online advertising the word is used more loosely. The "thing" being bought and sold is a person's attention, usually measured as a click. A media buyer pays one platform for the click and earns from another when that visitor does something valuable. Unlike textbook arbitrage, this is far from risk-free: the buying price (CPC) and the selling price (RPC) both move hour by hour, revenue can be reduced later by a clawback, and the platforms on either side can change the rules.

So search arbitrage, traffic arbitrage and ad arbitrage are all really trading businesses with thin margins, not guaranteed-profit machines. The skill lies in spotting where the spread exists, and in noticing quickly when it has closed.

Think of it like this

A trader buys mangoes at the wholesale market for 60 rupees a kilo and sells them outside an office block for 90. The 30 rupee gap is the arbitrage, minus the fruit that spoils.