Aaron Wall recently wrote a blog post about how click arbitrage is killing Yahoo! Search Marketing. His arguments make a lot of sense and if you consider that buying keywords through Yahoo! Search Marketing is less expensive than buying those same keywords through Google then you might think that advertisers have a door to instant profits. But the search engines have actively fought click arbitrage and have met with some success. They will likely get better at this. Still, the opportunities are still there.
The way click arbitrage works is like this: An advertiser pays for low-priced keywords at a pay per click company with cheap clicks – all of them except Google. And they drive that traffic to a web page with Google AdSense ads. This has worked really well in the past for high-priced keywords. When visitors get to the web page with the ads on it, they don’t find much valuable content and click away – on an AdSense ad. These AdSense ads have earned the publishers thousands of dollars in revenues for clicks that they’ve paid just a modest amount for at Yahoo! Search Marketing and other PPC providers.
So when Aaron Wall says this is killing Yahoo! Search Marketing, he makes a good point. Yahoo! Search Marketing didn’t get serious about fighting click arbitrage until February of this year. Now it may be too late because the company is in deep trouble after having spurned Microsoft’s buyout offer and experimenting with placing Google ads on its network of websites.
The big question for PPC advertisers going forward is, Will Google be the main show in town or will Yahoo! Search Marketing turn it around and be more competitive? Will other players learn to compete? It won’t fare well for anyone if there is only one reliable PPC provider and I’m hoping that Yahoo! can find solutions to its internal problems that keep them in the game.
