• http://www.avalancheinternetmarketing.com dangerlarson

    Another point in defense of Arbitrage is that it can IMPROVE the user experience in some situations.

    Inexperienced searchers on the web have trouble using the full power of search engines to find their information. Often they end up on “low quality websites”. These sites often are made just for AdSense, or may not even be able to show ads from AdSense, YPN, or other major contextual ad networks. They are only able to monetize with 2nd and 3rd tier providers.

    What then happens is that the web surfer clicks on the ad and is transferred from a low-quality site, to a “higher quality” site where the company placing the ad is more likely to do a better job meeting the user’s need since that company is paying for the traffic on a per-click basis.

    Does the advertiser get hosed? Maybe, and maybe not. Hopefully the advertiser has split their campaigns so they are bidding appropriate amounts on content clicks. Hopefully they are advertising in the correct venue – If a company is selling six-figure consulting contracts, then contextual advertising (or maybe even PPC in general) is a total waste of money.

    Sure, there are arbitragers pushing the limits of what I consider to be ethical, and there are others engaged in outright click fraud, but it’s not like advertisers are unaware of the risks. Neither I or any other person have an unalienable right to advertise on Google, Yahoo, or wherever. Just like investing in anything else – I must read the “prospectus”, and know the risks before investing.

  • http://www.blackbeardseo.com Blackbeard

    The other thing you really might want to think about is contextual search ad arbitrage vs. affiliate arbitrage. In other words, sending someone to an affiliate page as opposed to a page of contextual ads. Both are arbitrage and probably get lumped together when you don’t specify which is what, but they are very different in how they operate.

    Contextual ad arbitrage is all about driving up a CTR on an AdSene or YPN ad basically. If anything it actually helps Google and Yahoo a lot because it created sites in their network with a lot higher volume of targeted clicks. For advertisers, it probably helps them a lot more than a big social media site like Digg.com or Joe Schmoe’s crappy Blogger blog would. I mean really, if you are buying traffic from a specific keyword and you are sending them to advertisers bidding on a related keyword, if the user clicks on the ad, their interest has been pre-qualified TWICE before they get to your site. Thus, I think it could be argued that contextual-ad arbitrage sites would probably convert a lot better than the average website in Google or Yahoo’s network.

    As far as affiliate arbitrage, you only make money when you make sales. Google might not like it because they want to get in the CPA game themselves, but the bottom line is that affiliate search arbitragers drive real sales and real performance. If they don’t make the sales, then they lose money. All the risk is assumed by the affiliate.

    Just my 2 cents.

  • Melissa

    I’m in the “In Search of ROI” camp. If an arbitrage site is converting for us, great. If not, I want the ability to exclude it from our distribution. As this article points out, that’s not always possible, especially since many of these sites are lumped into the search network instead of the content network. And only Google allows site exclusion in content – Yahoo currently does not, although this has been a frequent advertiser request.

    Either way, the advertisers need more control. We should decide where our ads are placed. Many of these garbitrage sites have very poor conversion rates, and the advertisers should be able to exclude them.

    Also, there *is* arbitrage happening on MSN. Many arbitrage sites are advertising with MSN on the cheap, and sending clicks to garbitrage pages full of high-CPC Yahoo ads – many of which are barely relevant to the original search query. It’s a big problem in some sectors.


  • http://www.mesotheliomaweb.org/alimta.htm alimta

    “If the search was “lawyer”, one can assume it’s a fairly ambiguous query. Because this is an ambiguous query, it’s often not an overly expensive click compared to other legal terms. So, an arbitrager will buy the keyword “lawyer” and send it to a page about “personal injury lawyers,” a click cost that is often four or more times more expensive than “lawyer.” Should an advertiser be charged for a “personal injury lawyer” click when the search was just for “lawyer?” Why should a company be able to buy an ad about one keyword and send traffic to ads about an entirely different keyword?”

    YES! This is one big reason so many advertisers opt out of Google’s content network. The arbitrage sites dilute the specitifity that was the selling point behind PPC to begin with. One reason so many people get upset at Yahoo is that their search network contains parked sites that cannot be opted out of, and these sites use PPC to bring in visitors on low-priced keywords in hopes that the visitors will click on the high-priced YSM ads.

  • http://profitrank.com Jason G. Williscroft

    OK, definitely in the “Defense” camp.

    My company operates in the intersection between the Search & Affiliate spaces, and one of the fears we constantly have to address with our clients is that affiliate attempts at arbitrage will damage their own Sponsored Search efforts.

    Frankly, we think they should EMBRACE the arbitrageurs, and I think we have a strong economic argument to support that point of view.

    Beyond simply tolerating the practice, our advice to our clients is to encourage affiliate arbitrage actively and to support it in any way they can.