Automated PPC Arbitrage – Conspiracy or Opportunity?

Pay Per Click Arbitrage Exchange

Arbitrage is the simultaneous purchase and sale of an asset in order to profit from a price differential in 2 exchanges or marketplaces.

For example, let’s say that XYZ company’s stock is trading on both the NASDAQ and on the FTSE. There is a bid (someone willing to buy the stock) on the NASDAQ of $100 and an ask (someone willing to sell the stock) on the FTSE of $98. An arbitrage trader would simultaneously buy the stock for $98 and sell it for $100.

Their are people placing these simultaneous risk-free transaction with sports books as well:

“A sports arbitrage situation occurs when bookmakers’ prices differ enough that one can back all possible outcomes of an event and guarantee a risk-free profit no matter what the outcome.” – arbhunters

Arbitrage trader exist to capitalize on the inefficiencies in a market place.

So what’s this got to do with SEO and PPC (pay per click) you ask?

Well on last weeks mesothelioma case study I received this comment in my moderation cue. At first glance I just though someone was being cute by comment spamming me with an XSS attack.

Then I realized that the URL had an overture root. Since I strongly doubt that Overture would be vulnerable to XSS, I looked up the target of the redirect and found this:

Mesothelioma Collect Millions of Dollars
As seen on television. Mesothelioma lawsuit and compensation information. We can help you collect the compensation that you are entitled to. Free advice nationwide.
(Advertiser’s Max Bid: $55.79)

So either:
1. Overture was actively buying the “click” from Google and funneling it through their highest paying matching keyword or
2. Google was actively selling the click to Yahoo or
3. Some individual wrote a pretty nice arbitrage script – that happened to 404 before completing.

Whatever happened, I got screwed. Google paid me less than a dollar for a click that was funneled through the $55.79 ad placement in overture.

The question is:

Are Google and Yahoo (Overture) conspiring to make huge profits from the rips (price differential) in their adword prices? If you grok arbitrage, market makers and PPC you understand how much the publishers and advertisers are getting screwed if this is happening.

or (if an individual wrote this script)

How can we write a fully automated Arbitrage PPC bot? How might we funnel a click (surfer) from a low paying adword all the way through a high paying adword on another “PPC exchange” without requiring an additional click and without it involving click-fraud?

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9 Responses to “Automated PPC Arbitrage – Conspiracy or Opportunity?”

  1. […] Black Hat has written an interesting post on PPC arbing. […]

  2. Andy says:

    Love the content here – can you not just get a big black hat and have a white background?

  3. John says:

    I’m not sure about one thing. Is the guy who left the comment talking about a Google Ad link? I’m confused as to how and where he found the link.

  4. aaron wall says:

    right click on the adsense link…then copy the link location…then post it in the address bar…strip the google part off…and then see where the ad leads. you can use something like webbug or firefox livehttpheaders to track all the redirects, etc

    tons of people making money off arbitrage, but most of them dont just go after the most expensive terms. some people target 15 cent clicks and send them out on 3 and 4 dollar clicks and watch the money pile up that way.

  5. Marcus says:

    Its fairly easy to automate arbitrage and there are big bucks to be made. I know of people making well over $1.5-$2m per year at this. You just need to track your spend on AdWords and make sure it exits via a higher paying link on Overture. Overture are well aware of this game and only work with a limited number of affiliates who got in early.

  6. xuron says:

    wouldn’t they just deem this click fraud and ban your account? seems very risky to me.

  7. xuron says:

    heh, you would have 100% CTR…

  8. […] But it doesn’t have to end that way. If what they really want to do is stop adsense arbitrage, rumination has come up with a rather elegant solution: Here’s what I mean (in my kind of psuedo code): Add these lines to the application. […]