Click Arbitrage Is Alive And Well, Thanks To Automation

Early in my digital career I learned the ropes of pay-per-click, which included things like the Overture Keyword Tool, bid jamming, affiliates and click arbitrage.

It truly amazes me how cyclical paid search can be. Trends can go away and come back, as if they never left. Affiliates and click arbitrage -- two things I learned about early on -- can cause trouble. While some problematic behaviors did not exist for years, we have automation to thank for their return.

In the purest form, an affiliate program allows an advertiser to only pay once they receive a conversion.

For many business owners and executives, the promise of zero risk is too enticing to turn down. But because everyone was so hot on affiliate programs and how profitable they were, many lost sight of how those affiliates drive sales, and shady practices ensued.

Among those practices, affiliates bid on the advertiser's branded keywords, which carried the absolute lowest cost per click and highest conversion rates, in order to take a percentage of the conversion revenue from the advertiser.

Essentially, it capitalized on the advertiser’s investment in building the brand. As advertisers became more guarded against these types of affiliates, they disguised themselves by copying the same ad text that the advertiser used and setting an astronomical bid to beat the advertiser the auction.

Tools like The Search Monitor made it difficult for them to get away with these practices by monitoring for this type of activity and empowering brands to report it, giving some control back to the advertiser.

Around the time of the crackdown on affiliates using deceptive tactics, a new breed of fraudulent advertiser emerged -- often under the guise of another search engine advertising itself on Google. Meet click arbitrage.

Here is a fantastic explanation of click arbitrage from 2007. I spoke about it in 2008 at a conference.

Fourteen years later, we again face a serious problem that was a hot topic before I married, had children and launched a company, which is now alive and well and hitting the exact categories I highlighted 14 years ago.

In a nutshell, click arbitrage is when one advertiser buys a click in order to sell another click.

For example, another search engine could advertise on and encourages searchers to compare the results for search terms just by clicking the ad.

If they searched for “patio furniture,” the ad then links to a search results page on the other engine for “patio furniture.” It seems harmless enough, but this is where deception and fraud can make their entry.

Arbitragers bid on a cheap, long-tail keyword, completely replicating the results experience on the subsequent page their ad linked to, with one major change: they serve results for high-volume, more expensive keywords.

Two areas I highlighted in 2008 are still the hardest hit today: Tax software and home security.

Google made an effort to clean up its results by modifying the Quality Score algorithm to include factors like landing page relevancy and navigability, which really hit the arbitragers hard, so they modified their approach to stay in the game and many were moved from being “Search Network” distribution partners to “Content/Display Network.”

But alas, the efforts of the past were in vain, as we see the automation of today putting less emphasis on quality. All a click arbitrager needs today is to set a campaign objective of clicks and their poor-quality experiences are off to the races.

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