Search Arbitrage is purchasing a keyword on one search engine, for example, Google, while directing the person searching to another engine (i.e. Ask.com, about.com, info.com) for the same or similar more expensive term. In simple terms, it is when “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.
A site will buy search ads and send the unsuspecting searcher to another page full of ads. The arbitrager is paid when searchers click out on yet another ad. Once you host ads on your site, your next goal is to drive traffic to your site. This is usually done using PPC ads displayed on search results. If your site pays less for buying clicks than what your ads receive, then you have made a profit. This is the essence of search arbitrage.
How does it work?
While the concept of search arbitrage may be simple, the execution is sophisticated. To give you a clear understanding, consider the search term “running shoes”. You may get a list of results, of which one would be an Ask.com listing. Clicking on this will redirect you to the Ask.com search engine. The arbitrager makes money off the following clicks. So why is Google allowing this? In 2008, Google made an effort to block this practice; however, the reports after showed low AdSense revenues, so they let it back into the system.
Does search arbitrage help advertisers?
The plus point of search arbitrage 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 set 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 that 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 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 search arbitrage space.