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What is Adsense Arbitrage and How Does it work?

Posted on May 21, 2007 by Tim Schroeder

Google Adsense Arbitrage (AKA Pay-Per-Click Arbitrage) is the act of exploiting price differences between the pay-per-click search engines and using these differences to profit with the pay-per-click affiliate networks. This process is best understood with a few examples.

You could purchase low cost keyword ads via MSN Adcenter and then send them to a landing page you create with Google Adsense ads on it. The goal with PPC arbitrage is for the visitor to click on your Adsense ads so in most cases you want to add enough text so that Adsense knows what type of ads to display and nothing else. Remember that the Adsense ads shown are based on the webpage’s content.

If you set a maximum bid of $0.07 a click on your MSN Adcenter Ads, you need to average a per-click-payout on your Adsense ads of something higher than that. Your views to click conversion ratio will also play a part in the equation.

1. The first step would be to do your keyword research.

Just try and think of random terms that might command a high cost-per-click and plug them into the free Google Adwords Keyword research tool (i.e. lawyer related keywords, finance related keywords, online degrees, weight loss, and personal improvement services etc.) Enter a high CPC into the keyword suggestion tool such as $100 and then sort the displayed results by highest CPC.

2. Next, you would want to join Google Adsense if you have not done so already and then create a webpage based on these higher paying keywords.

3. Then setup an account with MSN Adcenter.

You could also consider trying some of the even smaller PPC networks but the volume is usually to low.

4. Create a new keyword campaign and bid on hundreds or even thousands of related keywords using a very low maximum bid-per-click, usually somewhere between $0.05 and $0.10 per click.

The trick is creating high volume and bidding a low maximum cost-per-click. Because you are bidding at a low CPC you will need hundreds or thousands of keywords to usually get the volume needed to make good money.

The reason you are using Google Adsense on your landing page is because Google Adwords is the most widely used pay-per-click network which commands the highest bids.

As you can see, it’s not rocket science but not all PPC arbitrage campaigns are going to be profitable. You may lose some money initially and experimenting is key. Always choose a low maximum cost-per-click for your ads and set a fairly low maximum amount you are willing to spend per day. You can always raise this amount later.

Some people claim that the less Adsense Ads on a page the better, and it may be true depending on placement. I personally have not done enough experimenting with this. They say this because of what is called the bid-gaps.

Suppose you find a keyword that commands a high CPC of $3.00 to $5.00 for the first three positions but after the first three positions the CPC falls to $0.65, $0.30, $0.15, $0.10, $0.10 etc. The difference between these high CPC positions and the lower CPC positions is considered the bid gap. Remember that Google Adsense only pays you a percentage of what the advertiser pays for these clicks.

Now suppose you have several different Adsense ad spots on your website for a total of 9 different ads. A couple of them may give you a high CPC payout while most of the other ads only make you $0.15, $0.10 or less per click.

In this theory, the more Adsense you might have on the webpage, the higher the chance of the visitor clicking on a lower paying ad. All I can say about this is to experiment! Try adding just a couple of well placed Adsense ads as a test for a few days followed by a landing page with more ads and compare the differences in payouts and conversion ratios.

IMPORTANT: Lately, there has been a lot of buzz about Google banning Adsense accounts for Arbitrage or creating those MFA (made-for-Adsense) websites. I have not seen a whole lot of facts shown yet to back up this speculation but if your considering starting your own Arbitrage test I’d proceed with some caution. I would not be at all suprised if they are banning some accounts and it’s probably better for internet advertising as a whole anyway.

The first to break the news (that I’m aware of) was JenSense and but it’s now being blogged about everywhere. One counter argument made by the well known “ShoeMoney” can be found here (basically saying that you should wait for more facts to come in before panicking etc.)

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2 Responses to “What is Adsense Arbitrage and How Does it work?”

  1. jeff

    - 9th May, 09 12:05am

    Very clever

    I’m not yet ready enough to try it but I’ll definitely remember this for when I start running ads and I’ll keep in mind your imporant note

    Thanks

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