Does traffic help improve SEO ranking?

Thats not always the case...what about people who get a disproportionate amount of traffic from direct referrals? For instance, photoshop tutorial webmasters post their tutorials everywhere and can get tons of referral traffic. This would be an example where the sites rankings literally could be terrible, yet they still get traffic without being ranked. Also keep in mind, if the sites content was exceptional (in this case the tutorials) then many people might link to the site naturally which could serve to increase the persons rankings in the search engines. This would be especially true if the webmaster had a section where it said "share this with others by linking to this tutorial" and then had html code with the keyword/anchor text and URL that the viewer could copy and paste. The aforementioned example would be a case where the TRAFFIC results indirectly in SERP increases without ANY decent rankings already in existence.

 

Traffic does affect to a limited extent
For example, the bounce rate (somebody reaches your website through a search term but hits the back button) of the traffic affects your SERP rankings for sure