What Is Google Arbitrage?

Google Arbitrage

Google arbitrage is based on understanding two basic aspects of Google's paid search services -- AdWords and AdSense. AdWords allows people to bid on keywords that searchers enter into Google. The winning bidder's short text ads then appear on the search engine results page when the term is searched. Each time someone clicks an ad, you pay a certain amount -- which is why the service is also called 'pay-per-click' or PPC. The idea with Google arbitrage is to pick a useful term that doesn't cost a lot per click.

AdSense

AdSense is Google's contextual advertising network. Contextual advertising means that Google displays text ads on a site based on the content. For example, if you have a website about credit cards, then Google might display credit card ads alongside your content. With Google arbitrage, you're looking to bring people to your site at a lower cost than the amount you receive for an AdSense click. For example, a person comes to your site based on clicking a 50-cent AdWords ad on Google. When there, he may click on another advertisement on your site. You receive around a dollar for the click, giving you an overall profit.

Effectiveness

Arbitrage worked for some site owners for the years leading up to 2008. However, Google cracked down on arbitrage by early 2008. It tweaked its search algorithm to push ad-saturated sites with low-quality content down the search results pages. This effectively made arbitrage an obsolete tactic for most people involved. Even when arbitrage worked more effectively, it could lead to heavy losses if you ended up paying more in AdWords than you made from your AdSense clicks.

Google Policy

Google's AdWords site explains its policy on arbitrage websites. While Google doesn't explicitly state that arbitrage is banned, it does point out that many of the traits of arbitrage sites could result in problems. For example, Google states that websites with a primary function of getting users to click on ads for other sites are prohibited under its policy. This describes many basic forms of the arbitrage website. Break the rules, and you may find your account suspended.