Few words in the online marketing world raise more diverse opinions than the single word "arbitrage." Be warned before you say it in mixed company. The reactions will range from vehement cursing to shrugged shoulders to sly smiles. Everyone has an opinion; some are based on facts; others on conjecture, but the word is guaranteed to start a heated discussion.
Search arbitrage 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. The arbitrager pockets the difference between what they paid per click and what they get paid per click.
While the concept of arbitrage is simple, the execution can be sophisticated. An arbitrager has to know what they are being paid per click, understand the clickthrough rate on any given phrase, and combine that information with what they are paying for the traffic. If any of those numbers suddenly change, it's possible to lose a lot of money very quickly. Few arbitragers know their revshare percentage, so they may have insight into what a click is worth, while others fly blind in this regard. Many people try arbitrage, though few are ultimately successful.
Caught in the middle are advertisers. Advertisers often don"t have insight into where their ads are being shown on partner search sites of Google and Yahoo. Once you move past search sites into the content networks, the visibility becomes even murkier.
Most advertisers find their ads on arbitrage sites by actually clicking on an ad and seeing one of these ad pages. it's the sight of their ad displayed on a page where the only content is advertising, and then the realization that their ad dollars are funding these sites that quickly lead to emotional responses. In the end, many have opinions on arbitrage that are often based more on feelings than actual figures. Before jumping to conclusions, it's worth looking at both sides of this seemingly ambiguous story.
Few words in the online marketing world raise more diverse opinions than the single word “arbitrage.” Be warned before you say it in mixed company. The reactions will range from vehement cursing to shrugged shoulders to sly smiles. Everyone has an opinion; some are based on facts; others on conjecture, but the word is guaranteed to start a heated discussion.
Search arbitrage 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. The arbitrager pockets the difference between what they paid per click and what they get paid per click.
While the concept of arbitrage is simple, the execution can be sophisticated. An arbitrager has to know what they are being paid per click, understand the clickthrough rate on any given phrase, and combine that information with what they are paying for the traffic. If any of those numbers suddenly change, it’s possible to lose a lot of money very quickly. Few arbitragers know their revshare percentage, so they may have insight into what a click is worth, while others fly blind in this regard. Many people try arbitrage, though few are ultimately successful.
Caught in the middle are advertisers. Advertisers often don”t have insight into where their ads are being shown on partner search sites of Google and Yahoo. Once you move past search sites into the content networks, the visibility becomes even murkier.
Most advertisers find their ads on arbitrage sites by actually clicking on an ad and seeing one of these ad pages. it’s the sight of their ad displayed on a page where the only content is advertising, and then the realization that their ad dollars are funding these sites that quickly lead to emotional responses. In the end, many have opinions on arbitrage that are often based more on feelings than actual figures. Before jumping to conclusions, it’s worth looking at both sides of this seemingly ambiguous story.
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