Let's take a walk together down a click-path that's become increasingly popular for less-savvy users. We'll start at MSN's search page, where the results for credit card offers are looking especially black-hat:
First off, we can see that blogspot subdomain spam is still remarkably effective, despite the fact that MSN has been alerted to the issue for many months. I'm also curious about how the word "assified" is relevant (nevermind "spatchcock") to credit card offers, but I'm picky... Now let's follow that link (it's cloaked, so you actually get re-directed):
This lovely site is serving contextual ads and since we don't want to be here any longer than we need to, we'll just follow the first one that suits our fancy:
That's odd... It's another spammy-looking site serving AdSense and a variety of other contextual ads. We'll click another just to see if we can get to a real site:
OK, this is getting ridiculous. Let's just click a few more times:
And one more for good measure:
That's all... I'm done, and I think we've illustrated the point. If one wanted to, one could follow a near-infinite loop of contextual ads pointing to pages serving contextual ads and attempting to re-monetize that traffic. The real question here is - who the heck is paying for all these clicks?!!
This is the process of PPC arbitrage. Any click that earns a certain amount of money can, potentially, be re-monetized for another, higher amount by serving increasingly targeted and more expensive ads (and keeping the CTR at an acceptable ratio). If I'm site #1, paying $0.10 a click for traffic, and I make $0.35 per click (and convert 30% of my visitors into clicks), I'm making money, albeit a very small amount. The practice of click arbitrage exists in thousands of online markets and makes for an exceptionally low-quality surfing experience (as seen above).
The real culprits here aren't the arbitrageurs - given the chance to buy traffic at $0.10 a click and make $0.12 per visitor, you have to expect that players will enter the market. Behind the veil is AdSense (and to a lesser extent, other contextual ad systems like Azoogle & Yahoo! Publisher Network). They could very easily shut down the practice of arbitrage (and thus, improve the quality of users' experiences across the web), but they choose not to. Why? Because contextual ads like this are a huge source of revenue. Those millions of clicks purchased by ad middlemen drives up the cost of ads and the return earned by the ad providers.
It's not an issue that we deal with in-house, but it is something that a lot of people in the SEO and web property space confront daily. I do wonder how the more "legitimate" advertisers feel about this practice, though, as they're the ones paying the premiums that make the arbitrageurs and the contextual networks rich.
Arbitrage only works if click through is unnaturally high. I'd be surprised if genuine click thru rates are much more than 2%. That means that the secondary click has to be worth 50 times the primary click. How many markets exist where you can buy relevant clicks at say 10 cents and then sell them on for $5?
Google must realise that the arbitrage model has an inherent exposure to click fraud.
You are truely a nooB to AdSense if you think an arbi page gets 2%. HAHAHA. Why not label this comment *clueless*.
Sorry. But let's not spread misinformation about arbitrage when it is clear to those of us who do it fulltime that you are off big time.
I believe that there are AdSense pages getting 20-50% CTR on average because of how well-blended and focused the ads are. The funny part to me is that one page serving ads will buy traffic from another page serving ads who bought traffic from another page serving ads, etc.
Even with 50% CTR, you have to be doubling the ad click cost each time in order to break even.
I think that you need to quadruple it to account for Google's unknown cut.
Are you asking if I would knowingly pay to be featured on an All-Ads website? Yes I would.
But... That would depend on how well the ads are presented, how targeted the traffic is and the overall cost versus revenue produced.
If all of my competition is there, then I might say yes depending on ROI. Otherwise I would give the consumer no other navigational alternative than to visit my competition.
The question for me is does it work or not?
If the medium stops performing, I will pull the ads. (Regardless of the medium.) If contextual advertising starts going downhill, I will simply reallocate those funds to something that works and leave the contextual ads for the suckers that haven’t figured it out.
So... What do you mean by "legitimate" advertisers? What are the rules? When does it turn from White to Grey to Black? Where is the line? Does it matter?
Aloha, Dave.
hang on jbwebs..no need to be mean! Say sorry to dburdon!
Rand, this is such a great post! And yes it's frustrating for us SEO professionals but imagine how annoying it is for the searcher!
I find this problem occuring mostly on Google, Yahoo isn't half as bad. In fact this problem has put me off using Google when I'm searching, Yahoo gets my vote any day!
I'm an advertiser, and I've been complaining about AdSense since it started. Traffic from AdSense converts very poorly compared to AdWords, and it always has. When it first started you couldn't even bid less for the AdSense traffic, so you were stuck paying good money for the worst traffic. I had to remove AdSense from my campaign as soon as it was added.
What's worse than the low-converting traffic is that I know that I am helping to make the Internet a worse place if I advertise with AdSense. Users who go through the assified process of clicking endlessly on AdSense spam sites are not happy, nor should they be. I don't want to be associated with click arbitrage sites any more than I want to be associated with porn or hate sites. It's bad business and morally corrupt.
As dirty as I would feel about supporting these guys by buying clicks it is nothing compared to how the Google team should feel. They should be ashamed of what they've done, and the way they're earning their money. AdSense sounds like a nice idea, until you realize how it is abused to confuse people and take advantage of market inefficiencies. Organizing the world's information? How about hiding the world's information under a pile of ads.
I have also had the same problem. I am also very upset with the quality of ads that appear in the Sponspored links in almost all search engines including Google. Clicking on them takes you to another Adsense rich site. I really hope that Google does something to stop advertisers like this. It is a great point to talk about but the good news is that the original Search for credit cards is now getting good results in MSN. :)
Search engine, search engine fell on your head. Search engine, search engine soon you'll be dead. All of those bad serps from spammin' and stuff. Search engine, search engine when is enough? Search engine, search engine why all the ads? Search engine, search engine your time is in fads.
Hee hee. "Assified". As in, "I browsed the assified section of the newspaper, looking for a good rate on a gently used spatchcock."
"I do wonder how the more "legitimate" advertisers feel about this practice, though, as they're the ones paying the premiums that make the arbitrageurs and the contextual networks rich."
It is one of the most frustrating things about PPC right now for a number of reasons.
-It makes PPC campaign management a pain. I'm not keen on the fact that I have to have people manually looking at every piece of data for every campaign.
-The second you get your margins right and start looking like a hero to the suits, costs artificially inflate. Seems that verticals are attacked by a few players all at once, so occasionally somebody mentions that your vertical looks sexy and boom- costs go up. Begin the blogspot (and other autoblog) spam
-Makes content networks basically suck for the most part
-It hurts the image for the whole industry when all people can find is spam when looking for a legit product
With all that being said, I still don't blame advertisers for doing it. If they are smart enough to analyze a market to that extent, I am glad they are monetizing their ability. In fact, I'd probably hire somebody for a more traditional marketing role based on their arbritrage abilities.
This makes me sick. If I am an adsense publisher and the starting point for these ads are on my site then my visitors will think that I am associated with this crap.
I work very hard to build the best and most credible site that I can. I am starting to think that I am one of a few rare people who actually takes pride in his websites these days.
Isn't it impossible to make money doing what you describe - at least on the aggregate level? After all, in an infinite loop of arbitrage the only one making money is Google. The scheme assumes that the ads on the page will pay more than what you paid to get the traffic there. Like a pyramid scheme, that can only work for so long - eventually someone will pay more to get the traffic than they receive when a percentage of that traffic clicks on one of the ads on their page.
So of course the first thing I do is search on Google for you query. There the top listing is creditcards.com which is a great affiliate site that delivers a fantastic user experience. Not to mention some other solid links on the SERP.
Of course the person that started with your query on Live probably would have gone to Google after being frustrated and had a such a better UX that I'm not sure they would go back to MSN again to search.
I nice reminder how Google grabbed 60% of the search market...and an absolute embarrassment for MSN.
Arbitrage will always exist. Just look at financial marets where savvy investors make millions, even billions of dollars doing arbitrage.
Time to stop crying and move along, it's getting annoying that everyone and their sister is crying about this now. It's more popular that TMX Elmo. It's the cool thing to talk about, I understand, but let's but a fork in it. It'd done.
jb.... I am curious to know if you spend much on PPC ads that are syndicated?
Oh ya. I spend ;-).
I've done click arbitrage, and I'm not ashamed of it for the reason that it seems to be the norm. You shouldn't be able to do it, but you can and it's the engines job to fight the problem.
As an advertiser, I've seen that AdWords traffic from arbitrage sites converts much, much lower than other traffic. I have to go through logs and identify these sites all the time so I can exclude them from campaigns.
I think the worst threat, however is from Yahoo. It's getting a bit easier to be able to return Overture ads, which bring in more money as well as cost advertisers much more than AdSense ads. It's pretty easy to get traffic from one demographic and show them pricier ads meant for a more desireable one. There are a bunch of intelligent people out there turning $0.10 clicks into $1+ per visitor.
Talk about coincidences ... I just yesterday posted a rather similar message in a finnish SEO-forum. We were discussing why most people make a direct link between scam & SEO/M, and IMO a poor search experience is reason enough for "average joe". And instead of credit cards I used inkjet cartridges... talk about affeliate /mfa hell..
And like you, I also do wonder who the heck is paying for all these clicks? After all, there is no way to make real money from thin air endlessly (it's like folding a sheet of paper - there is a limit of 8 times).