Arbitrage is a beautiful name for the well known principle: "buy low, sell high". And the "Adsense Arbitrage" (also known as "Google Arbitrage" or "click Arbitrage") is a realization of this principle in the field of AdWords and Adsense programs. How does it work? First, one builds a webpage (arbitrage page) that contains keywords that are competitive and highly paid for by Adsense, but usually does not include (or almost does not include) any information (at least, nothing valuable). So such a page consists of nothing but links to contextual ads from AdSense.
Second, the person places an ad in AdWords with a link to that page and sets bid prices for his keywords (that are usually irrelevant to the page content) at the lowest level: $0.01-0.05.
Thus the Advertiser drives cheap traffic to his page in hopes that a surfer, that sees only the links, will click on some. And because of the bid gap he expects to get substantial profit. Indeed, this "click arbitrage" tactics brought its users tons of money. Not by chance, the authors of books teaching "the method secrets" promise: "Money in 15 Minutes", "Gold-Filled 24-hour Online ATM"…
But something happened: recently Google has updated its "landing page quality" scoring algorithm. The algorithm itself is a "know-how" of Google, but because of it, the Cost Per Click (the minimum amount to be paid for an ad display) for ads that link to low–quality arbitrage pages leaped to $5-10. This makes it almost impossible to profit from this method. And a lot of "Adsense Arbitrage" players start to loose money. They do not welcome the changes. There is much talk going on about "Google craziness", "Google shooting itself in the leg" etc.
So, is the method of "Adsense Arbitrage" going to die? Certainly not. Essentially, Google wishes to see its ads on pages that "provide relevant and substantial content". So there are ways to return to the previous level of CPC. One option is to rewrite the existing pages according to Google's guidelines, say, by adding relevant content. Another option is to test other cheap traffic sources instead of AdWords, such pay per click engines as Yahoo and MSN.
The Author: Samuel Stambler.
Owner of www.readerspot.com and
webmarketnotes.blogspot.com
