Why Adsense Arbitrage Is Dead

March 27th, 2007 · No Comments

Making money through AdSense arbitrage, in its simple form, is dead.

If you just read about AdSense arbitrage somewhere, and were wondering if you should jump on the bandwagon, the short answer is no, you should not waste your time and energy on AdSense arbitrage. I am going to tell you why in just a minute.

Before I proceed, let me briefly explain to you what AdSense arbitrage is and how it is done today. The way it works is that: first you would find a content niche that has some high paying keywords in either Google AdSense or Yahoo YPN, then you generate a big list of low-cost keywords surrounding the high paying keywords. You then use the low-cost keywords in a google Adword campaign to drive traffic to your Made for Adsense webpages that are stuffed with high paying keywords. For example, if you can generate traffic at an average of 10 cents per click to your MFA pages which generate ad clicks at an average of $1 per click, you would break even on this AdSense arbitrage campaign if you can achieve a click-thru-rate of 10%. Anything above that CTR would earn money in your pocket. Once you successfully found a profitable niche, you repeat this process and setup more niches. Sounds simple. But before you jump in, let me explain to you why I think AdSense arbitrage is dead.

Keyword Cost/Earning Gap Shrinking

The whole premises of AdSense arbitrage is to exploit the inefficiency in keyword pricing in the marketplace. In other words, you rely on a huge gap in prices between what (dumb) advertisers pay and what you are hoping to pay for the same set of keywords in a certain niche. The bad news is that advertisers are getting smarter with the help of, unfortunately, you. You basically taught the advertisers with the early success of your AdSense arbitrage campaigns that they should bid on more keywords. For the most part, they have much bigger budget to acquire tools that make this process easier for them. The end result is that it is increasingly harder for you to buy low and sell high.

Google Improving Its Algorithms

In most cases, AdSense arbitrage involves creating MFA pages that are low on content but high on high-paying kwywords. Google knows that while it may make more money in the short term, but in the long term, it will suffer if this whole MFA things drive away its advertisers because of low return on investment. Google has improved its conversion quality tracking capability so that it will deliver lower paying ads to your MFA sites if they determined that conversion rates are low on your site. This could easily turn your profit making AdSense arbitrage business into money-losing business.

AdSense arbitrage is not Auto-pilot

Many internet marketers tout that AdSense arbitrage is easy to implement and once implemented it can be on an auto-pilot. This is just simply not true. Like I mentioned above, the keyword landscape changes constantly in your chosen niche, and Google is constantly improving its algo to improve the entire ecosystem’s efficiency. That means you have to constantly monitor your AdSense arbitrage campaigns. And because AdSense arbitrage is a number game, i.e. you have to have a lot of MFA sites to make money (because each AdSense arbitrage page only makes a tiny profit). Imaging if you have 50 campaigns, and 50X1000 keywords, how much effort you have to put in to just maintain these network of MFA pages.

In conclusion, if you are considering using the simplest AdSense arbitrage approach to make money, my advice is that there are better ways to make a living online. The only plus side of AdSense arbitrage is that you learn a lot about the niche that you target and you could change your business model to a profitable one (e.g. paid subscription if it makes sense).