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PPC Arbitrage: Does It Still Exist?
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PPC arbitrage occurs when someone buys ads on Google adwords or another major search engine and then sends the traffic to a PPC web page. For example, an affiliate might buy the keyword "spyware" and then redirect traffic to a web site selling anti-virus software. This is sometimes called "PPC to affiliate arbitrage." The idea is that affiliates use arbitrage to make money. Those doing the buying and redirecting are redirecting to domains that pay more than the initial click. Another popular form of PPC arbitrage involves creating a website containing nothing but ads. You can then purchase PPC traffic to send to the site. You can make money as long as you make more per click than you pay Google per click. The trick with both forms of arbitrage is that the initial costs are high and the eventual profits are not always great. Plus, trying to launch an entire PPC campaign just for affiliate dollars can seem daunting, to say the least.
The Case Against PPC Arbitrage
In May 2007, Google AdSense publishers received emails from Google stating that their AdSense account was considered "an unsuitable business model." The publishers - most of them arbitrage publishers - were given about two weeks notice that their accounts would be disabled. Some marketers have also spoken out against arbitrage, noting that if affiliates are able to buy branded terms or are allowed to bid more than merchants do, then companies will suffer. Other marketers point out that arbitrage is a limited numbers game - the market is only large enough for so many affiliates. All of these issues have led some to conclude that PPC arbitrage is dying out. With big companies moving against the practice, the market filled with existing affiliates and the potential detrimental affects on merchants, it does not seem like a thriving opportunity right now.
Why PPC Arbitrage May Not Completely Die Out
Even though PPC arbitrage doesn't seem like a thriving business right now, there are many reasons why it will not die out fully. One reason is that affiliate programs by definition ensure that affiliates do not bid higher than the merchant, ensuing that money is still to be made from the system. It is unlikely that any money making technique will die out completely as long as someone out there wants to earn cash. Secondly, PPC arbitrage allows merchants potentially to move competition out of the way. Ideally, merchants can share listings with affiliates rather than competitors, so that money continues to flow towards their business. This is a big benefit of arbitrage, at least from the company side. Thirdly, arbitrage is a cheap way to cover more ground. Affiliates can focus on the lower-priority keywords that merchants don't want to bother with. With PPC arbitrage, though, the merchants ensure that all those keywords are still driving traffic to their company and not to the competition. Fourthly, affiliates do not use up marketing money. Marketers can have herds of affiliates that may help business. Even if business does not take off, it's not as though a huge campaign-worth of funding has been lost. Quite simply, marketers and businesses have little to lose with PPC arbitrage but have profits to gain. |
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