Search Arbitrage Issues

Dec 6, 2006 - 11:19 am 2 by
Filed Under SES Chicago 2006

This session was going to be moderated by Jeffrey K. Rohrs, although due to a delayed flight, Tim Daly filled in for him.

Tim from Sendtec gives a brief description of Search Arbitrage, where PPC advertising is purchased for the purpose of getting the user to click on more expensive ads on your own site (making money from the price difference). Search Arbitrage was linked to Click Fraud by BusinessWeek who performed an in-depth investigation into the issue. A 23 year old Hungarian millionaire Roland Kiss rakes in $70,000 ad revenue per month through a "Paid to Read" membership base. He then explains that Google's introduction of PPC Landing Page Scores was partly because of the problem of arbitrage and not offering any value. An example search for Cypress Trees shows a PPC advert on Google which enters a disguised arbitrage site and all the links click through to yet another Made For AdSense site, making an infinite loop. What's Google doing about this problem? - They introduced landing page quality into the PPC position algorithm; Keep on updating the algorithm to weed out people trying to beat the system. What's MSN doing? - Have been slow to react, although not as significant as Google's needs; MSN was clean and friendly when launched, but Arbitragers found it as a new home in August; MSN began its first efforts to combat arbitrage by only allowing one advertiser to use a specific URL. What's Yahoo doing about the problem? - Yahoo refused to comment on the BusinessWeek article and did not want to provide information to the session panel about what they do to combat fraud and arbitrage. How do we solve this problem? - Search engines need to develop specific requirements and have strict enforcement in the terms used of the amount of content required to show paid ad listings; Engines should work together and also have a joint blacklist of suspected fraudsters; there should be a manual daily review of each partner site that delivered traffic to see whether they are in violation.

On opening the panel up for comments regarding the presentation by Tim, Jake Baillie from TrueLocal jumps in to say that he doesn't think that Click Fraud should be directly linked to Arbitrage. Although the Cypress Tree example is a bad thing for the users and he doesn't like it, he does support the need for arbitrage when done correctly and honestly. He's worried that search engines may try to regulate advertisers too much and remove creativity which is so important in PPC.Kris Jones from pepperjamSearch then steps up to take a very strong view of what he calls "Garbitrage" for Made For AdSense arbitrage, although thinks that affiliate arbitrage is perfectly legitimate (Buying PPC and sending traffic to affiliate links to earn a percentage of the end sale/conversion). Kris then goes on to hammer the search engines for not attending the panel, and goes on to promote his company's own arbitrage-style shopping site. David from Clix Marketing which purely works in PPC introduces himself, and makes a controversial joke which I'll exclude from this transcript. He agrees that search engines are partly responsible for managing arbitrage, because is effects the user experience. Frank Watson of FXCM asks the audience, who came to the session to actually learn how to do search arbitrage - no one puts their hand up - although most people probably were.

Only one presentation was made on this session, it seems that this session was mostly aimed as a debate. You'll have to come to the conferences to learn what questions people asked and some of the more extreme opinions voiced.

These posts may have spelling and grammar issues. These are session notes, written quickly and posted immediately after the session has been completed. Please excuse any grammar or spelling issues with session posts.


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