What if you paid a cheap price for adwords to increase traffic on a (for example) directory site for mortgages or surgeons, because of the high click revenue. Do you think you would end up profiting or paying to much out of pocket costs. Some of those clicks or worth about $5.
You will lose money. Arbitrage is against Google's ToS, and the system is designed so that you can't profit from it. You won't get 10 cents keywords that will drive sufficient traffic to generate sufficient clicks. The End.
One more time: The keyword tool is an estimate of what an advertiser might pay for the top positions. It is based on a typical quality score. It is what they would have to bid to get those positions with a typical QS, not what they would actually pay. However, most advertisers in the top positions don't have a typical QS. It is better and therefore their costs are lower. They may actually pay only $3, not $5. That's how the system works, rewarding quality advertisers. The tool is for the search network which is totally different than the content network, which is what you are as a publisher in the Adsense program. There is little correlation between costs on the search and content networks. In fact, on such high cost niches, the correlation is even less. So an advertiser might pay just $2 or even less. That's for the top position. In a block of four, the fourth advertiser might pay $1 or less. We don't know the percentage that Google pays publishers. For argument's sake, let's say 50%, best case scenario. Not everyone will click on ads. As an advertiser, I know it's tough to get 1% on the content network, most get a tenth of that. For argument's sake again, let's say it's 10% but I highly doubt any publisher gets that. Say the average click costs advertisers $1.50 for ads in your block of four, you get $0.75. Only 10% click on ads so for every 100 visitor, you make $7.50. But, it costs you $10 to get those visitors. The math just doesn't add up and that's the best case. Plus, as Magda said, Google will not give you good QS because you have ads on your site.
use google keyword tool to find out which keywords bring more money and less compitition, that's all you need to make profit.
There was time when this practice was profitable. You just needed to be a very good paid search manager. I had made very good earnings through this method in the past. It did not last long and I have not tried it since then. However I was able to determine that it was quality score that was hurting my earnings. Adwords Quality Score was released in November 2005. You will see the earnings in the screenshot where after that during the year 2006. Late in the year earnings began dying down. It could have been because Google tweaked it's quality score to defend against keyword arbitrage. Here are the earnings:
no i don't. start with the lowest maxcpc and work your way up until you start seeing some clicks from your adwords account. When you start seeing clicks keep a close eye on adwords spend matching that with against adsense earnings. I recommend that you try to use another ad network for arbitrage such as msn pubcenter, or chitika. You will need to test which forms of advertising are the highest paying and generate the most revenue. It isnt only about generating paid traffic to the website. Extensive testing of different ad networks and ad placements will affect your ROI.
Nicely explained. If you will attract cheap traffic you wont get proper response in terms of high CTR so if 5 of 100 visitors click an ad you will actually loose $0.10x100 = $10 and earn somewhat the same. All depends on the keywords research, some keywords are profitable others are not. Moreover some content is illegal in Google Advertising, and as said by Magda, their system just prevents other making profit in this way, there is something called quality score, if your landing page quality is not good you will be charged more CPC.
It actually is possible. Look at my post above. Those where my earnings back in 2006 from adwords and yahoo publisher network. On average my ROI was 100% but there where some very good weeks and months where I saw 500% ROI. Quality Score was released in November 2005. You will see those earnings are after that and there are still plenty of ad networks earning money via keyword arbitrage TODAY!! It just takes someone who is smart and is a real adwords/web monetization expert. Like myself!!!