All You Need to Know About Search Arbitrage

Before beginning to understand Search Arbitrage let us first understand what Arbitrage means? Arbitrage is the strategy of making money by taking advantage of price differences across markets. 

What is Traffic Arbitrage?

In Digital Marketing, Traffic Arbitrage refers to diverting traffic from one site to another website or search engine and making money by taking advantage of price offsets. There are a few ways to do this

Search Arbitrage

Native to Search Arbitrage

Display Arbitrage

What is Search Arbitrage?

Search Arbitrage is ranking for a keyword on one search engine, for example, Google, while directing the person visiting your site to another web page or search engine  (i.e. Ask.com, about.com, info.com) for more expensive keywords. 

To understand search arbitrage better, let’s consider the example of an arbitrager who profits from search arbitrage. The arbitrager begins by bidding on a specific keyword on Google or another search engine to secure a position in the search advertisements. Once the position is obtained, they redirect people clicking on their website to another website featuring their own ads. The critical aspect here is that the arbitrager ensures that they pay less for buying clicks than what they receive for their advertising. Hence the name search ads arbitrage. In this case, they will have earned a profit. This is the fundamental concept of search arbitrage.

Search engines also use it by buying ad placement for a specific keyword and directing people to another search engine. For example, Ask.com buys ad placement on Google for high-priority keywords, and once people land on their page, they show relevant ad banners using Ad sense and then profit off the click on their site. In simple terms, “Search Engines” pay for a click to get a click and earn a profit from the difference. This is most commonly seen in PPC advertising.

What is Native to Search Arbitrage?

Native to Search Arbitrage is defined as directing the traffic on Native ads from a web page or search engine to another page for more expensive keywords.

To understand it better, we need to know how Native ads work. Unlike banner ads, native ads are advertisements that are uniquely integrated into the appearance and style of the site they are displayed on. These ads typically blend well with the surrounding content and tend to have a less aggressive sales pitch. 

The main goal of Native to Search Arbitrage is to drive traffic to these native ads and then redirect users to another network that features high-cost keywords, with the aim of earning a profit from the difference in cost.

What is Display Arbitrage?

Display Arbitrage is defined as driving the traffic from Display Ads from a web page or search engine to another page for the more expensive keywords.

Similar to Native to search arbitrage, display arbitrage uses banners or display ads. This involves directing traffic obtained from display ads at a lower price and then selling them to another network at a higher price.

Does search arbitrage help advertisers?

The plus point is that advertisers can gain traffic from ad positions they have no control over on a search page like Google. When an ad is not placed on the first page or does not attract a click, it is difficult to gain traffic. But with arbitrage, the site displays a page filled with ads. If your ads appear on that, they gain a chance to receive a click. Advertisers have the chance to receive traffic from these sets of ad positions.

Arbitragers bid for hundreds and thousands of keywords and a few of them ensure that the ads placed are closely aligned with the keywords they have bid, bringing in quality traffic to the advertiser. This, however, is not the case for all arbitragers. The advantages of search arbitrage are a few, however, the general opinion to it from search marketers is often negative.

There are numerous arguments as to why search arbitrage is not a good strategy or a fair strategy. From hindered user experience to arbitragers considered as middlemen taking their cut, this particular strategy certainly has its flaws. That being said, there is a considerable group that sides with this practice. But what matters is what consumers think of it. Their response is what will make or break the space.

Search arbitrage or not, we at Luxeveda have a team of marketing specialists that can help you with all your paid marketing requests. Contact us and we can help you out.