Search Arbitrage - Wrong or Unfair

What is Search Arbitrage? This approach has been gaining attention and popularity by the day. Issues have cropped up… some people are against the idea because they feel that it is wrong or unfair. Other advertisers don't mind ethics as long as they get traffic to their sites. Debates have been heating up and the topic is already beginning to make heads turn and causing eyebrows to be raised.

But what really is search arbitrage anyway? First, let’s take a look at the definition of arbitrage. Arbitrage is defined as the nearly simultaneous purchase and sale of securities in different markets in order to profit from price discrepancies. Or put simply, buying something at a low price in one market and reselling it at a higher price in another market. Search Arbitrage is when a publisher makes a profit by earning more from hosting search ads from other advertisers than he does spending on search ads to attract traffic.

Where do publishers purchase these ads? The ads are bought through PPC (Pay Per Click) advertising suppliers, the two largest being Google and Yahoo. Google's program is called Adwords. Yahoo's program on the other hand is run by an acquired company called Overture. Other advertising sources are Espotting, GoClick, LookSmart, and a lot more.

How does a publisher profit from Search Arbitrage? If you’re a publisher, you earn money every time a visitor clicks on one of the ads on your site. So if you earn more from this than from what you spend on search ads, you’ll make a profit. To make this work for you, your web site has to turn a high percentage of visitors into buyers. You can achieve this by employing tactics like making the advertisements more obvious; advertising products and services that are in demand and have exceptional values; going for highly targeted traffic and showing ads which give a high click pay out like insurance. Pay Per Click programs includes Adsense, Leadhound, Clicksor, and Bidvertiser.

Search Arbitrage is a legitimate marketing strategy if used well and properly. Some sites that engage in search arbitrage do have great content to offer that consumers will find really helpful. However, search arbitrage becomes questionable when publishers take advantage to a point that the sole content of their sites are all advertisers' ads and nothing else. They are doing this, hoping that search engine users will click these ads, which would then mean more money for them.

This is frustrating for users. Instead of finding what they're looking for on the first click, they are taken to another page full of ads and they still have to click on the paid listings in order to find relevant content. More often than not, they are even tricked to clicking irrelevant links which will redirect them to even more ads, and higher priced ads at that. Some of these ads are even disguised as content or menus designed to confuse users into clicking them.

Not addressing this issue can put a serious dent in the world of internet marketing. Sooner or later, users will be aware of this practice, and they will soon stop clicking ads as a result. Publishers can never go wrong with making sure that their sites contain pages with good information that would be of use to the searcher. So then the ads displayed on those sites, would be relevant to what the searcher is looking for. The goal should be to provide users with value and a quality web search experience.