There are few topics that will incite more varied opinions than the topic of "arbitrage". Be aware that before you bring up this topic the reactions may range from slick little smiles or a mere nodding of the heads to outright rage and disgust. Everyone out there has an opinion on arbitrage, some like it, some hate it, but no matter what you're opening a can of worms when the topic comes up.



What is search arbitrage ?

Let's say that I build a website about "massage therapy", on that website I'll place ppc advertisements from companies like Google AdSense or Yahoo Publisher Network, or any number of PPC affiliate sites. I know that clicks on those ads that relate to massage therapy will pay me $2.00 per click. Obviously, in order to make money from those ads I'll need traffic for my site. Now I'll find another PPC search engine, one that may not have much competition for the keywords massage therapy. I'll create an ad, and buy traffic from PPC Engine #2, paying a mere .10 cents per click, directing the searcher to my website that contains the ads that pay me a much higher amount. I paid .10 cents to get a user to visit my site and hopefully they will now click on my ads that pay me $2.00 per click, if they do I just made a profit of $1.90.

Simply put, a webmaster will buy search ads at various PPC Search Engines and send the traffic gained there to another website that contains more ads from yet another PPC Search Engine. In a nutshell, the arbitrager earns his money by buying low and selling high. Whle the concept may seem quite simple, the execution is a bit more complicated. The arbitrager must know how much they are being paid per click, compute click through rate on keyword phrases, and use that information in conjunction to what they are paying per click. Bid prices change frequently as well, if the numbers that the arbitrager has figured change, they can quickly lose a great deal of money.

Good or Evil ?

Some think arbitrage is the root of all evil, while others think there's nothing wrong with it. Obviously the arbitrager who is making money with it sees no harm at all in it. Some advertisers feel they're being cheated by this system, some are happy for the additional traffic and sales they gain with arbitrage sites. Some people feel it's not creating a good user experience. If a user is searching for "massage therapy" and they click on a result only to be taken to another site with more ads they now have to make yet another click to find the information they wanted.

Ultimately there is no cut and dry, no black and white when it comes to arbitrage. It's used the world over in many different ways. With some people defending it, and some cursing it, it's sure to remain a very hot topic for debate around the internet for quite some time.