If so, you have quite a few hurdles to overcome. Google’s quality team is gunning for you, countless advertisers are watching their logs, and just about everyone under the sun is excluding you from their content network campaigns. What’s a gray hat arbitrager to do?

Perhaps the answer is a back door method to arbitrage Google ads.

It seems that, as a partner in Google’s search network, Ask.com is displaying Google ads through Ask’s contextual advertising program. If this proves to be the case, this would be an under the radar method for arbitragers to run Google ads.

The benefit from the arbitragers’ perspective is that advertisers can’t easily see which sites are sending them traffic through Google’s search network, and thus, advertisers often can’t tell if that traffic is profitable. In Adwords, this data would be lumped in with the rest of the Ad Group and keyword data within campaigns that have the search network active (selected by default on all new campaigns).

From the advertiser’s perspective, since many campaigns are running the search network, and the data from the search network is combined with the data for the entire campaign, this is a problem that may go largely unnoticed. Furthermore, advertisers are forced into situations where they’re adjusting bids and losing position not because of poor performance on Google and other search sites, but because of poor performance on arbitrage sites.

Based on this scenario, advertisers are wasting lots of money and losing ad position because of a back door avenue for arbitrage traffic disguised as trusted search traffic.

For a long time, a point of contention with the search network has been the inability to opt out of specific search network partners and the inability, through Adwords, to receive data related to specific search network partners.

While you should always test your ad networks independently to decide whether you want to continue with that network, the ad network should, as accurately as possible (if not specifically site by site), inform you of where your ads will be displayed.

I do not feel that Ask.com contextual advertisers participating in arbitrage meet Google’s definition for its search network, which is described by Google as such:

Your ads may appear alongside or above search results, as part of a results page as a user navigates through a site’s directory, or on other relevant search pages.

I’m not an expert at arbitrage; however, based on my own analysis it seems that arbitrage is happening through Ask’s contextual ad network using ads served by Google’s search network.

I’m writing this article as a question to the Internet marketing community to see if you too have had your ads displayed through the search network on arbitrage sites through Ask’s contextual network or any other contextual network, for that matter.

Based on your research and experience, do you find this practice to be inconsistent with your expectations of Google’s search network, and what are your thoughts on the matter?

Comments

If you look at blog search results for shower gel you will see Google’s version of the web. Google and Microsoft already own in game advertisement firms. With Google bidding billions of dollars for part of the US wireless spectrum you can bet that there are going to be even more ads between content producers and consumers.

It doesn’t matter what ads appear on the publisher site if they didn’t sell the ads directly themselves. Somehow the publisher is off the hook because they didn’t know, and it wasn’t Google’s fault because the system is partially automated.

Newspapers Practicing Arbitrage

Google killed some of the scraper AdSense garbage, but now arbitrage is going mainstream, with newspapers leveraging their brands to publish thin content from freelance writers. Think of newspapers buying ISP data or mining their server logs and suggesting writers create content about crap that got a lot of traffic when Google featured their story on the homepage in the past.

Newspapers Practicing Automated Garbitrage

The above trend is going to make the most competitive keywords even harder to rank for as there will always be at least one fresh news story about every high value topic.

• This just in…make money with the best forex platform!
• This just in…mortgage rates are at all time lows!
• This just in…online education is more affordable than you thought!

Google has already proved that they don’t mind large publishers creating robotic content and building its authority with spammy links. Did you know that BizJournals offers Google searchers a credit card application service? If I posted similar content on this site Google would kill it.

Anyone Can do Public Relations

Beyond the recycled content, the movement will also be fueled by lazy underpaid writers who will heavily rely on social media and others work for story ideas. If you are good at spamming social media then the mainstream media will act as your megaphone without requiring you to hire a PR firm.

When is a Link Buy Legitimate?

Most profitable publishing enterprises are moving toward producing lower quality content. As a publisher, a brand is nothing more than something that allows you to practice arbitrage while appearing that you provide a valuable service. It allows you to get extra exposure and charge a higher rate for your ads.

The only difference between a smart strategic ad buy and a text link sale that Google wants you to report is the publisher’s rate card.

Comments

For one, Google will now permit the placement of three link units on a page. The idea seems to be one that gives site publishers more reason to be satisfied with only having Google on their pages, since a variety of units can be placed in some of the trickier spots.

The big update concerns the Page Quality Guidelines. Google has been cracking down on arbitrage, where people buy cheap ads that direct visitors to more profitable ad-filled pages.

This new guideline sounds like it is targeted directly at arbitrageurs, despite the nod to creating useful site content Beckmann made:

This new policy requirement doesn’t mean that you can’t use online advertising; it simply means that if you do, you need to be sure that the way you advertise meets with the guidelines, whether it’s through AdWords or through any other advertising program.

However you advertise your site, it can always benefit from significant and relevant content, clear navigation, and the other points in our quality guidelines.

If you’re paying for an ad that leads to a more profitable AdSense ad on your site, Google probably knows you’re doing it already. Hoping they won’t catch it may not be the most sensible strategy here.

Google Hammers AdSense Arbitrage Sites

Arbitrage is a fancy word for “buy low, sell high.” It’s a term that usually appears in conjunction with stories about the commodities markets. Google has no desire to see its AdWords and AdSense products commoditized by enterprising people who buy a cheap ad that leads to a more valuable page stuffed with AdSense units.

Jennifer Slegg has posted her account of numerous AdSense publishers receiving a breakup letter from Google. The search advertising company will shut down AdSense accounts it has deemed offensive.

In some cases, arbitrage and so-called ‘made for AdSense’ sites have been licenses to print money. Some sites noted in Jennifer’s post have been bringing in $10,000 or more per month to their publishers.

“There doesn’t seem to be any appeal process, other than the usual one,” she wrote. “And I wouldn’t hold my breath that any of these accounts would be reinstated.”

Naturally, the move is not without controversy. “Google

The magazine looks at how Google’s attempt to prevent click arbitrage is not really working and instead, many legit businesses find themselves no longer able to afford the CPCs.

Meanwhile, Jeremy “Shoemoney” Shoemaker is living like a king off his arbitrage efforts.

Two years ago, Shoemaker says he was living on unemployment checks. Since then, he says he’s made more than $2 million by arbitraging search terms related to cell phone ringtones, teeth whitening and mortgages. “I love Google,” Schoemaker says. “They changed my life.”

I knew Jeremy had made good money off of AdSense, but TWO FRICKIN MILLION DOLLARS!!! And there was I, buying him a drink in Chicago!

Shoemoney also goes on to explain how he’s able to stay under the radar of Google’s quality scoring system.

Schoemaker insists he and others have in fact found a way to circumvent the crackdown. He says he uses techniques like “cloaking” to fool Google’s algorithm. Arbitrageurs know the search engine’s IP addresses, the fingerprints that reveal the source of any Web page visitor. So Schoemaker says he sets his web pages to automatically display legitimate content to the Google spider, while giving other users the ad-filled arbitrage page. Schoemaker says that makes him virtually immune to Google’s quality-regulation measures.

I’d ask Jeremy to stop by and tell us how he does it, but I know his response will be similar to the one he gave at SES

“If you give a man a fish, he’ll eat for a day. If you teach a man to fish, he’ll eat for life. I believe differently. If you teach a man to fish, he’ll steal you fish!”

Good advice and explains why he’s always smiling.

UPDATE: Jeremy responds to the way the Forbes journalist presented the facts.

Andy Beal is an internet marketing consultant and considered one of the world’s most respected and interactive search engine marketing experts. Andy has worked with many Fortune 1000 companies such as Motorola, CitiFinancial, Lowes, Alaska Air, DeWALT, NBC and Experian.

You can read his internet marketing blog at Marketing Pilgrim and reach him at andy.beal@gmail.com.

Cleaning Out Search Advertising Trash

Has click arbitrage impacted your keyword strategy? How have you improved the quality of your landing pages for your visitors? Post a note about it at WebProWorld.

The problem starts with advertisers who purchase keywords at the minimum bid price on Google AdWords, a ClickZ report noted.

Users who click that ad end up on an AdSense page. This is usually a low-quality page filled with AdSense or other contextual advertising that pays the advertiser a higher cost per click than the advertiser paid for the keyword in AdWords that delivered the traffic to that loaded page.

It’s a poor quality experience for the visitor, one that Google feels diminishes the trust and value of its AdWords product. To combat this, Google announced on its Inside AdWords blog that changes would be made to landing page quality requirements:

Staying on Google’s good side with regards to having a quality landing page should not be too difficult. If a search ad leads to a page full of AdSense and no relevant content, Google will likely find it is a low quality experience and boost keyword prices accordingly.

Pages that obey Google’s guidelines on providing relevant content, properly handling personal information, and offering an easily navigable structure, should not have any difficulty with their minimum keyword bids.

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David Utter is a staff writer for WebProNews covering technology and business.

I take it this term is at the level of oral folklore only at this stage, and hasn’t found its way into general usage (only two instances of it in the Google index, so if I’ve actually mentioned it here before, well sorry… I need Google’s index to act as my memory bank…).

Well, good. I’m glad this silly term never caught on. (Sorry, Mike… really just needed something keyword-rich to post about today… and keyword arbitrage was it… hope you understand.)

Some points:

1. It’s nothing new to buy advertising ultimately to sell advertising. There is nothing inherently wrong with a publication using search marketing for customer acquisition. That’s not arbitrage, it’s targeting.

2. In the case of sites that don’t add much genuine value, the question becomes one of traffic quality. Specifically, how can these sites turn a profit if they are buying clicks and only a small percentage of visitors actually click on something? Unless their conversion rate of click to click is really high, they’d need to be getting $1 per click in revenue for every dime spent on clicks, you would think. Not really. Some of these publishers do have totally legit conversion rates of click to click of 50% or higher, because some of their readers might click on five or six different paid links, bringing up the average. However, a small minority of these sites are committing systematic click fraud. It will take more than sticks and stones namecalling or a slap on the wrist to stop these bad apples. They need to be prosecuted.

Click pimping? No. Call it what it is. It’s either a perfectly legitimate targeting strategy, or in some rare cases, it’s a cover for out-and-out click fraud. Calling it click pimping gives it a dangerous, nebulous middle-ground cachet that would serve to needlessly attract certain louts, and needlessly dissuade quality publications from buying ads low, to sell them high.

Pimp on!

Reader Comments…

Andrew Goodman is Principal of Page Zero Media, a marketing consultancy which focuses on maximizing clients’ paid search marketing campaigns.

In 1999 Andrew co-founded Traffick.com, an acclaimed “guide to portals” which foresaw the rise of trends such as paid search and semantic analysis.

Jeff Nolan points to a definition of arbitrage (risk free profit), but in the context of a poor analysis. Jupiter analyst Niki Scevak takes issue with an article by Bambi Francisco on how keyword arbitrage is leading to a bubble in Google Adsense valuations. Unfortunately, the article is behind a costwall, but Niki’s post summarizes:

Bambi cites Nextag as an example of a ‘search arbitrageur’ because they bid up the term ‘dvd players’. Yet Nextag does not buy the keyword and simultaneously sell it for a riskless profit. I can’t say enough that this assertation is categorically, absolutely and unconditionally wrong (again to put it mildly).

But the term ‘dvd player’ is more valuable to vertical search engines like Nextag than it is to merchants and so Nextag can afford to pay a higher price than can merchants.

I won’t pick on Niki’s analysis or assertion that Bambi’s article is horribly misleading information, but instead explain how the Nextag example is arbitrage at work.

Say the keyword ‘dvd player’ costs $1 on Google’s auction market. On Nextag’s market it costs $2. Nextag does add value, by decreasing search costs for vertical merchants, say by $0.50 (lets not drift into a discussion of how they are extending the Long Tail, but this is about Fat Tails). Nextag also does have its own transaction costs, say $0.50. Overall, Nextag pockets a profit of $0.50 for their ‘value add’ — but if you assume the transaction was straight through processed and there were no credit or operational risks, this is risk free profit.

In this simple example, they are buying from one market where there is a low price and selling in another where the price is higher. How did they do this? By having superior information than other market makers or buyers.

Now assume that there was a delay from when they purchased from Google and when they sold to another party. That would be risk, the price could go up. Common in storable commodities such as natural gas. But on the other hand, it would create the ability to retain inventory as a hedge against price volatility.

So is there an AdWord bubble? Not by the Nextag example. As arbitrageurs, they are doing the opposite, and others will follow, gradually bringing the prices in both markets towards equilibrium. Who knows if the market is in contango (trending up) or backwardation (trending down), there are many other forces at play. As we are figuring out the economics of the long tail, I fall back on Says Law, where the market flocks to both scarcity or abundance to bring it back into equilibrium

Foreward: Five years ago I created RateXlabs with the good folks at Oncept tand published some whitepapers on bandwidth arbitrage conditions applicable to today’s computing commodity market. Finally I have a use for all that information, to share it and hopefully not mislead.

Ross Mayfield is CEO and co-founder of Socialtext, an emerging provider of Enterprise Social Software that dramatically increases group productivity and develops a group memory.

He also writes Ross Mayfield’s Weblog which focuses on markets, technology and musings.