It means sites that profit from different prices between search engine sites. For example you maybe able to send traffic from search results from yahoo for .10 per click and get .40 per click from google on your site.
Arbitrage sites are sites that make use of prices differences in cost clicks to make money. The idea is you prime Adsense to show high-priced advertisements on your site (say, $1 per click) and you direct traffic to your site using a cheap traffic source (say, a $0.10 per/click advertisement to direct traffic for YOUR site) on Adwords. So if 10 people visit your site and 1 clicks on your ad, you've broken even. If 9 people visit your site and 1 clicks on your ad, then you've just made $0.10. That's the ghist of it. I wouldn't recommend getting into it now unless you really know what you're doing, though. Lots of being have been banned in the past couple of weeks by Google for doing just that.
Technically, yes. and in the end there's still a chance that Google may ban you for it. In fact, most arbitragers like to buy their traffic from 2nd and 3rd tier search engines (such as 7search and looksmart) because the costs per click for competitive keywords there are much, much lower than Adwords. There's a lot of mystery over this whole arbitrage banning deal. Lots of noise has been made about Google banning people, but at the same time lots of people are still doing (and making a killing off) it. My personal opinion is that Google is concerned about 3 things when they decide to ban a site or not: 1. End user experience (meaning you can't have a site with crappy and very little content blantantly made for Adsense). Your site must provide value to the end-user. Google is a real Nazi about this. 2. TOS guidelines. Google likes sites that following their guidelines, meaning include "About us" "privacy policy" "contact" "sitemap" "terms of service" pages. This tells Google (rightfully or not) that your site is serious stuff. 3. Conversion for the advertisers. If your site produces 10,000 clicks to a particular advertisers, out of which none convert for them, it's a good sign that your site is an arbitrage site. In this case, Google will definitely shut you down. Of course, only Google knows which sites convert well and which ones don't. So this factor is fairly uncontrollable. Hope this helps.
oh, I forgot to mention that most arbitragers don't use directories to drive their traffic. Too slow.
Some people have been saying this but I don't believe it's true. I have discussed this in these forums enough that I decided to write a Google Arbitrage page on it because people are jumping to conclusions that are not in line with what Google says and does. [SIZE=-1]If you have cases of people being banned, please provide some specifics. It doesn't have to be a URL or a name but should have some description of what was being done and if they were banned from Adwords, Adsense or both. I'd honestly like to know but I don't think anyone could provide anything but hearsay.[/SIZE]
I think arbitrage is a viable method for generating quick cashflow but not good as a sole income or long term income source because you're not building an asset. You pay for visitors to come to your site, make you more money than it cost you to get them there and that's it. I did Adsense arbitrage successfully for a few months and used that extra money to fund my other businesses. If you're doing Adwords to Adsense arbitrage then you have to keep in mind that you're paying for your Adwords first and waiting a month to two months later to receive your Adsense check. You have to have a big cash reserve to pull that off. As for Google banning people for doing this, it's a minute percentage and it's not just because these people were arbitraging.
I'm a regular on WickedFire forums and a bunch of people there claimed they were banned. These people ranged from guys who ran straight-up MFA sites, to minisites with good content, to full-fledged sites with 70 - 100 pages. These people generally don't share their sites for various reasons, so we have to take what they say with a pinch of salt. When Google bans people, they almost never give any kind of reason so speculation is rampant. On their part, Google has been spectacularly ambiguous about their whole arbitrage policy. The fact that they encourage people to drive traffic to their sites using Adwords doesn't necessary mean they tacitly approve of Arbitrage, IMO. Personally, I believe that if you have good content on your site you should be fine. And like I said earlier, I also believe that how well your site converts for the advertiser plays an important factor (in fact, a spokesperson from Google said in a press release some time early this year that they were going to do just that - crack down on poorly converting sites)
Hey Tbarr, you mentioned that "the quality of your ads and content will not get you banned but minimum bids can rise to $5 or even $10 per click". Do you mean that over time, the prices of advertisements on your site will increase, assuming its a high quality site? I've never heard of that one before. Care to elaborate a bit more?
Could jump from pennies to dollars without warning. When I have seen it I was able to determine that I built a site modeled after one that I had purchased. Both sites used free articles but the one I built had articles that were used on 20 or more sites prior to me using it...it was a duplicate content issue.
That kinda reminds me of the many "I was banned from Adsense for no apparent reason" stories. If you let them talk a little longer you find out that they or their friends were clicking on their ads for a month or two and were almost up to $100. They then say they are going to set up another account in their mom's name. Did they say that they got banned from Adwords or Adsense? Were the MFA sites "what you need when you need it sites"?
Wait. So let me get this straight: you had 2 sites, one that you bought and another that you build from scratch. The one that you built (using duplicate content) did not jump in pricing whereas the one that you bought did?
Actually, no. These are people who vouched that they, nor their friends even clicked on their ads. I believe the people at WickedFire aren't that dumb. They were only banned from AdSense. Their arbitrage sites ranged from "what you need when you need it" sites to keyword-loaded crap sites with no real value.
The reverse happened. The site I bought had articles that appeared in four or less sites. The one I built used the best articles I could find but they were already in use by many sites. So Google just banned poor quality sites. A lot of people assume that arbitrage sites are necessarily content free, all sites should have quality content and Google will have no trouble selling traffic to and from the site.
arbitrage is the practice of taking advantage of a price differential between two or more markets: a combination of matching deals are struck that capitalize upon the imbalance, the profit being the difference between the market prices. http://en.wikipedia.org/wiki/Arbitrage
Arbritrage can lead to a ban of your Adsense ads, as Google has a strict policy against it. Also, don't engage in traffic exchanges websites and programs as they do not bring quality and targeted traffic to your site.