Affiliate marketing is all about selling traffic. The trick, however, is the same as in any other kinds of business: Buy Low, Sell High.

For some, "buying low" means generating their own traffic for free. These are like the manufacturers of the affiliate marketing world. The affiliate marketer pays for their traffic in the man-hours it takes to create site that end users are attracted to. One example would be a blogger who writes content to attract traffic that they can then direct toward their advertisers' sites.

Many successful affiliate marketers, however, operate more like stock brokers than manufacturers. That is, they literally pay for their traffic -- they simply pay less for it than what they turn around and sell it for.

Two Ways to Purchase Traffic
The two most popular ways to go about buying traffic for less than what you sell it for are search arbitrage and incentivized traffic. Where one is like investment banking, moreover, the other is like selling junk bonds.

Search arbitrage is more like investment banking. Essentially, with search arbitrage, the affiliate marketer places affiliate links and ads on that site and bid on related keywords on search engines. The idea is that the affiliate marketer pays less per-click for their search engine traffic than what they then get paid per-click .

Incentivized traffic, on the other hand, is like selling junk bonds in the sense that it involves re-selling traffic that has no value. Basically, this is traffic that has been given and incentive to click on the affiliate links or ads. Here, the trick is also to pay buy low, sell high. The source from which incentivized traffic is being purchased from, however, is the end user that makes up the traffic.

Why Incentivized Traffic is Bad
Incentivized traffic is worthless traffic. Where search arbitrage is like buying in bulk to resell at a higher cost per unit, incentivized traffic is not just like selling something that doesn't work, it is selling something that doesn't work.

You see, affiliate networks provide a two way service. On the one hand, they provide their affiliates with advertising so that those affiliates can concentrate on webmastering, and not worry about trying to sell advertising. On the other hand, they ensure that the clicks or "actions" that the advertisers pay for are legitimate consumers who might end up purchasing something.

If a user, however, is being paid to click on a link/ad, the advertiser is being defrauded. The user is not being attracted by the product being advertised. Consequently, there is no chance they might purchase something. Therefore, they are not a legitimate consumer, and that means that they count as an invalid clicks.

When an affiliate marketer uses incentivized traffic to generate revenues, then, they are defrauding the advertiser. This, in turn, compromises the reputation that the affiliate network has with their advertisers. Consequently, incentivized traffic is against the TOS of most all affiliate networks.

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