Pay per click arbitrage is the practice of buying ads on one pay per click search engine or through one pay per click advertising provider and making your destination URL a web page with pay per click ads, affiliate program ads, or flat fee display ads on it. The success of this marketing strategy depends on the arbitrageur making more per click when visitors click on their ads than they pay in clicks to get the traffic to that page. Many Internet entrepreneurs have used arbitrage to game the pay per click advertising system for several years and it’s reached critical mass. The search engines have taken notice and are working hard to address the issue. They now claim that they have done so.
Google, for instance, has changed its pay per click policies to include:
- manual reviews, smart pricing discounting (of publisher clicks), and quality scores (increasing the cost of advertising junk)
- improved duplicate content detection
- decreasing the clickable area in many AdSense ad units
- killing sub-syndication of their feed with companies like Ask
- keeping a greater percentage of ad revenue from each click
- requiring advertiser display URLs to match ad destination (starting April 1st)
Regarding that last point, Search Engine Land just yesterday published a post that explains how Google has had that policy in place all along but starting April 1st, 2008 will begin enforcing it.
Yahoo, too, is taking action to kill PPC arbitrage. These policies are making some people very happy. In fact, legitimate pay per click advertisers are ecstatic over these changes and most of us are saying that we’re glad the search engines are finally taking a stand against pay per click arbitrage. But there will be people losing a lot of money over the changes.
Nevertheless, I don’t think arbitrage is completely dead. Nor do I think it die off completely. There are still small pay per click companies out there that will need to survive and in order to remain competitive with the larger companies like Google and Yahoo, they will need to keep their click prices low and have more lax policies. Otherwise, they risk going out of business. This will create new opportunities for pay per click arbitrageurs. It may mean that they can’t do business with Google or Yahoo, either as a publisher or an advertiser, but they can still profit from the differences in click prices at the small search engines. I believe it’s just a matter of time before they figure this out and there’s probably a handful of arbitrageurs who are working on their first e-book right now.
When it comes to making money online, there is more than way. Not all of them are considered legitimate by those in positions of power and authority. But not all are frowned upon by the entire universe either. Pay per click arbitrage is one of those areas that has strong adherents and equally strong critics. Google and Yahoo may be driving a stake in its heart, but it will be a long time before it dies completely.
Interesting to see that a lot of commentators are predicting the death of PPC arbitrage.
Anything that the big guns can do to stop Joe Advertiser paying for worthless clicks is fine by me. As a quality content provider and AS publisher, I would hope that the click revenue to “good” advertising will increase through better smart pricing models.
But I can’t help feeling that the G lord (and Y too) may taketh away but might not giveth.
So google will begin enforcing this in April. What have they done about it so far?