Google AdWords/AdSense Arbitrageur Spotlighted But Who is Right?

Sep 15, 2008 • 8:13 am | comments (3) by twitter Google+ | Filed Under Google AdSense
 

The New York Times has a story about an AdSense/AdWords arbitrageur, a webmaster who makes money off getting visitors to his site through AdWords to have them click on his AdSense ads. The story is named Stuck in Google's Doghouse, where Dan Savage who runs SourceTool.com has sent a nine-page, 4,000-word letter to the antitrust division of the Justice Department over Google's business practices.

We have discussed the topic of arbitrage in this sense, even before it was coined that in the SEM world. But in May 2007, when Google decided to shut down arbitrageurs from what some may call, sucking the life of of the search results, it had a major hit for many small website operators. Including Dan Savage who made his money on making a few pennies of profit on those clicks.

Every since Google introduced the landing page quality score components, advertisers have been complaining big time. I wrote a pretty good summary of the history behind these AdWords Slaps in July, so you can read up about it over there. In short, while advertisers may have been paying $0.10 per click to get traffic, they may now be paying $10.00 for the same click, due to "quality score" factors that rose their bids.

Dan Savage is calling this move as monopolistic, at least in his case.

Google, he believed, didn’t like his Web directory because it was a search engine itself — though much more narrowly focused than Google’s search engine — and Google found it a competitive threat.

What’s more, Sourcetool competed directly with business.com, which was one of Google’s “content network partners,” meaning it gets additional advertising revenue because Google directs AdWords ads to the site as well as AdSense ads.

My thoughts? I am torn. I honestly don't think Google is going after business they find to be competitive. Heck, we see Yahoo advertising on Google, Ask.com advertising on Google and visa versa. But I do believe Google went after "arbitrageurs" because they felt the quality of those ads and results lead to a poor search experience. That is my thoughts and I can be wrong.

The debate is pretty wild in some of the forum threads:

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Comments:

Michael Martinez

09/15/2008 05:54 pm

People who are afraid that Google-Yahoo! will create an inflexible monopoly can strip that monopoly of its power by using alternative networks. It's not like those networks don't exist. It's just that people have convinced themselves Google is the only search engine in town. Doing business on the basis of self-fulfilling prophecies is a pretty poor way of doing business, in my opinion.

Charlie

09/15/2008 10:18 pm

<a href "http://www.youtube.com/watch?v=-KTiiTnvTpU">Google Yahoo Merger<a> See the above video to hear more of Dan Savage's compelling story.

Nicholas Williams

09/19/2008 07:00 pm

I am in a affilate company, tried to advertise on google. Their cost is entirely to high.The adverage person can't afford to pay $10.00 a click, I always say what goes up must come down. Just like Lehman Brothers.

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