The Google Loophole: Profiting Through Google Arbitrage
Google Arbitrage is not a program offered through Google but if you know how to work it right, Google can certainly become your “sponsor” and help you pay a bill or two each month. It’s based off an old world concept of arbitrage that’s being applied to benefit from today’s e-commerce traffic.
Ready for Google Arbitrage 101? Here you go…
What is it? Google Arbitrage is a system which can be used off a loophole that Google has between the cost of AdWords ads and the profit that can be obtained via the Google AdSense programs.
How does it work? Basically, you create a highly targeted website and set it up for Google AdSense. Your content must contain highly competitive keywords to ensure that you'll earn the highest possible amount from clicks on your Google AdSense ads. Then you purchase a Google AdWords campaign to attracts visitors to your website. You do this by bidding on very inexpensive keywords that are directly or indirectly related to the website's content. Once you get your price point and keywords right, Google AdWords will drive traffic to your website very cheaply and that traffic can have their pick on which of the relevant and expensive ads on your website to click on, helping you to earn money from Google Adsense. That’s Google Arbitrage.
How about an example? Here's a site that is bidding on inexpensive insurance-related keywords and features highly competitive insurance Adsense ads on its site.
How much can you earn? That depends on how crafty you are. If you use a domain you already own, design your site yourself, host it for free or at low cost, and get content for the site (specific to your keyword) for free, then you won’t have to pay for much at all. In fact, all you’ll have to pay for is the Google AdWords campaign and the rest is pure profit.
Is it compatible with Google CPA? That remains to be seen. In theory, Google Arbitrage should be compatible with Google CPA because Google would likely offer advertisers Google CPA in lieu of or in conjunction with Google AdWords. The difference for arbitrageurs if Goolgle CPA is launched completely to the public is that the money made from a click on that type of ad would not be guaranteed. (Google CPA clicks only make publishers money if a certain action is taken by the site visitor after they reach the advertiser’s website.)
What are the risks? You could lose a lot of money very quickly if the profitability of certain keywords changes overnight and you're not on top of things.
Does it have a future? Probably not. It's basically spam and degrades the user experience, but Google allows it to go on for now, probably because they can earn money on several clicks instead of just one. Also, as more and more Arbitrage participants join the game, profit margins will dwindle very quickly.
In summary: Enjoy it while it lasts! As mentioned earlier, Google Arbitrage is not a program warranted by Google so don’t expect to be able to call them up to get advice on how to do it. It’s one of those things where you just have to learn how AdSense and AdWords (or Google CPA) work and then read articles like this one or this one that help to explain the Arbitrage part so you can put it into play.
You can have problems with this.
I think just showing Google Ads on the page is not providing any real value to the searcher, and therefore Google is always on the lookout for things like that. They want, above all, for the searcher to be happy with results. Otherwise, they'll head on over to Yahoo or MSN.
IMHO, it is better to do this using a combo of contextual advertising (i.e. Adsense) and affiliate marketing (i.e. shareasale). Take the time to write good copy that pre-sells the merchant's product. You win by having a longer-term business strategy; the searcher wins by actually being presented with valuable content, including links to merchants that they may be interested in; and Google wins because they make money from the incoming click while providing a user with a happy experience.
Just my 2.5 cents.
It seems that there is a lot of mis-information concerning this issue. There are a few people still trying Arbitrage and falling through the cracks to financial oblivion, yet others report success..
Good article though.
You can lose a LOT of money very quickly if you don't really know how to use Adwords.
It's definitely not a beginner strategy. I think Google lets it go on because it's something that only a few people will be able to d really well. Meanwhile Google gets to double dip.