New York Times Reports on PPC Arbitrage

Written by Pablo Palatnik on September 15, 2008

It’s been a while since any good blog post or articles have come out talking and discussing PPC arbitrage. It seems the topic may be taboo to some or whoever is doing it well, may not want to talk about it so much.

The New York Times reports on Friday in an article titled, “Stuck in Googles Doghouse” which talks about Dan Savage, a website owner of SourceTool.com, a B2B online directory which uses Google Adsense to monetize his directory very much like Business.com (almost the same business model). SourceTool’s bids went up from .5-.10 cent bids to over $1.00 as we all saw quality score slaps over a year ago.

SourceTool’s monthly revenue was about $115,000 a month and was making about .5-.12 cents per click over the click he was paying. The classic case and exactly what is considered arbitrage.

So, why has been SourceTool bids increased? Why is this being reported in the Times? As you will read on the article, the major problem comes into play into Google being transparent about what they allow and do not allow. Mr. Savage (owner of SourceTool) never got a clear answer why his bids went up. He was told there were quality score issues with his landing page and as us search marketers can probably see from looking at SourceTool.com, most likely, arbitrage is the main reason for bids increasing on this site and Googles way of getting rid of SourceTool for paid search.

Below are some good video blogs on search arbitrage:

Shoemoney:

Kris Jones:

• When PPC Arbitrage Goes Wrong (A Small Case Study)