Dan Monarko of Flying Cork Media took a look at the practice of search arbitrage, who it benefits and what they do to protect their clients.
Search Arbitrage is the practice of purchasing a keyword on one search engine (i.e. Google) while directing the person searching to another engine (i.e. Ask.com, about.com, info.com) for the same or similar more expensive term and profiting from the price discrepancy. In layman’s terms these “search engines” are paying for a click to get a click and earning a profit from the difference.
From the article:
For example, let’s say our client was Nike. (Nike: We know you are not a client, but if you want to become one you can find my contact info below!). It costs Nike $0.15 to bid on their branded term and an Ask.com listing with the headline “Nike Shoes” is in position 2. Ask.com takes the person searching to the Ask.com search engine for the search term “Nike shoes,” which broad matches everyone bidding on the term “shoes”. You can quickly see how a $0.10 click can result in a $7.00+ click on a broad match for “shoes” on Ask.com.
We processed our client’s trademark complaint by each individually branded keyword to get these sites to stop using our client’s branded terms in their ad copy. Over the next three weeks Google eventually stopped these search engines from using our client’s branded terms. In theory, the branded terms should now be safe. Third party search engines cannot use the branded search terms in their headline copy anymore.
The chart below shows how our client’s branded CPCs increase by over 100% when Ask.com and others started their Search Arbitrage efforts. Once Google finally stopped these engines from using our client’s branded terms, CPCs returned to normal.
Read the full article here and check out the charts of how the cpc fluctuated when the arbitrage stopped.
AH… a profit deal.