With all the discussion about this lately, does anyone know the real answer and can post it here with a quote from Google terms.
I am going to guess (because i'm to lazy to re-read the TOS myself) that Arbitrage in itself is not against the TOS.. but it seems the only way you can make Arbritrage profitable is to have an MFA, or near MFA site, where the only way out is by clicking an ad..
I'm doing some arbitrage with excellent results so far. Key is : - Unique targeted content. Let your visitors read what they are looking for and let adsense read what you want (good keyword ad targeting). - Good layout. The one I'm using took me 5 lines of css and 2 or 3 html tags - Be compliant with google TOS. Read it and if you still have doubts ask directly to them. - Keep your cpc low and target keywords with many advertisers and high cpc. - www.keyword.TLD is your friend <title>keyword</title> and <h1>keyword</h1> are your friends too. it will keep your ads relevant and cpc costs low. - It's always better if you spend $2 and earn $4 than if you spend $10 and earn $13. - Try to compliment cpc traffic with free traffic. Free stuff is always good and for a text page with one or 2 small images you don't have to care for bandwidth. Those are my 2 cents, I'm a beginner in arbitrage but I'm already getting $10+ a day from 4 sites that took me 1 or 2 hours each to complete.
Arbitrage is not against the TOS, at least as long as the traffic you buy is from adwords. In fact google itself promotes the idea of using adwords to drive traffic to a site with adsense! Check out the "Success Stories Page" on the google adsense site and see for yourself, some of "success stories" are doing just that!
Arbitrage is being used by many including some dude Michael Plante to make pretty decent money. About 4500$ a month