AdSense Arbitrage

What is AdSense Arbitrage?

One of the most popular ‘black hat’ methods of earning AdSense cash is the use of the AdSense arbitrage technique. It is ‘black hat’ because it is looked down upon by Google and if any AdSense publisher is caught using the technique they can either be punished or they can be banned.

Unfortunately, for Google AdSense arbitrage is still a popular method of earning AdSense revenue among some publishers because it can be very lucrative if the method is applied properly.

It is not a recommended technique of earning AdSense cash because in essence it is cheating. The technique involves utilizing Google’s triad of services; Adwords, it’s search engine and AdSense. As a practitioner of AdSense arbitrage what you do is pay for low priced keywords in Adwords (but you could also use MSN AdCenter or Yahoo’s Search Marketing) and direct the unsuspecting visitor using the search engines to a page that contains higher paying AdSense ads. The publisher makes a profit from the difference.

How does AdSense Arbitrage work?

The underlying principle behind AdSense arbitrage is quite simple. For example one simple method is that you bid $0.10 for a keyword and direct the traffic from your cheap Per-Pay-Click (PPC) campaign to a landing page with ads that pay $3.00. ‘Black-hat’ practitioners have of course fine tuned the technique in a number of ways, many of which involves increasing CTR’s on landing pages to incredibly high values (some as high 40% which is phenomenally high in comparison to normal CTR’s  of 1-2%).

One such method of increasing CTR’s involves eliminating all alternative navigation links on landing pages. With all navigation links removed from high paying pages a visitor is left with no other option than to click on the ads present or use the back button.

AdSense Arbitrage and Google Smart Pricing

Like AdSense revenue sites, Google have hit back on publishers who utilize AdSense arbitrage. Whereas in previous years AdSense publishers could earn 60% of AdWords price, now Google have introduced the idea of smart pricing into the AdSense scheme. Some clicks are going to be smart priced there is no escaping this fact.

Smart pricing adjusts the cost of a particular keyword targeted click depending on the likelihood of the click actually resulting on a scale, registration, sign up on the landing page. If Google calculates that the clicks from a particular page are likely to result in frequent actionable outcomes then an AdSense publisher will earn close to the 60% of the original Adwords price. However, if Google works out that the clicks from a specific page are likely to result in non-actionable results then the AdSense publisher will be severely smart-priced.

How Google calculates smart pricing is unknown, so that its effects are extremely variable from one website to the next. But one thing it has done is severely reduced the profit margins for publishers that practiced AdSense arbitrage. Many have been hit hard enough to quit the practice altogether, while others are managing to cope but surviving on only a fraction of their previous earnings.