What Is ‘Search Arbitrage’ And How Does It Work?

What Is Search Arbitrage In Digital Marketing?

Search arbitrage involves purchasing advertising on one platform (typically via Facebook or native ad networks like Yahoo! Gemini, Taboola, Outbrain, and Revcontent) to acquire traffic and then send it to a monetized page of search results from engines like Google, Yahoo, or Bing. Clicks on these search results generate revenue for the marketer engaging in the arbitrage.

For such arbitrage to work, monetized search results need to generate more income than the digital marketer pays to attract traffic through ads. As an example, if a marketer pays 20 cents per click on Revcontent to drive traffic and generates 40 cents per click on the landing page, they have 20 cents of net income.

Although simple, search arbitrage can be risky. Search Engine Land writes in this regard:

An arbitrager has to know what they are being paid per click, understand the clickthrough rate on any given phrase, and combine that information with what they are paying for the traffic. If any of those numbers suddenly change, it’s possible to lose a lot of money very quickly.

Digital marketers may use native ads like these (from Taboola in this example) to direct web users to monetized search pages:

 

An example of search arbitrage ads.

The search pages are will often look like the following example:

An example of a search arbitrage landing page.

 

This particular page is focused on senior/assisted living. Other common advertising verticals include car sales, dental implants, and life insurance.

To be able to leverage arbitrage in this manner, the marketer or company needs to work directly with the search engine provider (e.g. Google, Yahoo, or Bing). Only a few companies have contracts with these search engines to engage in search arbitrage.

Search arbitrage is somewhat similar to content arbitrage, which we wrote about here.

 

Controversy Over Search Arbitrage

Search arbitrage is sometimes criticized for creating a poor user experience or for inflating the revenue of search engine providers like Google. In fact, the top result when one googles “Search Arbitrage” is an article from SearchEngineLand titled “Search Arbitrage: Web Blight Or Brilliant Marketing Strategy?” that makes such criticisms.

On the other side, many would argue all the kinds of traffic arbitrage are essential for making the paid traffic market more efficient, and thus ensuring better outcomes for both advertisers and publishers.

 

 

 

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