I’m doing a session on Thursday with Catherine Seda, Adam Viener & Jeremy Palmer on Affiliate Arbitrage on eComXpo – a fully online conference (i.e. you don’t have to leave your chair!).
Our show starts at 10am EST (5pm South African time) on Thursday March 22 and it promises to be really worthwhile. You can signup at eComXpo for free and the rest of the shows started earlier today and continues until Thursday.
On the note of Affiliate Arbitrage, Chris from SearchAnyway.com covered Brian Geddes piece on Search Arbitrage. There is often a misconception due to non-standard terminology in the industry. Let me clarify:
Both Search & Affiliate Arbitrage can be construed as affiliates bidding on search keywords and sending traffic directly to a merchant in exchange for a Cost Per Action payout, whereby the affiliate is paying the search engine on a CPC basis. Brian’s definition of Search Arbitrage is when scummy marketers use landing pages full of adverts being paid to them on a CPC basis, and buy CPC traffic from the search engines, on the basis that they should earn more per click than the click costs them on the search engines. To me, this is commonly known as Click-Pimping, something that I do not consider good for either the advertiser or the end user/searcher. I really call on the search engines to take these “pimps” to task and remove sites that offer no value at all.
The key difference is that CPA-CPC arbitrage has implied risk reward ratios, and the more efficiently the campaign is managed, the better for both merchant and marketer. CPC to CPA arbitrage also means in general that the arbitrager is using the company’s display URL in order to increase reach across the long tail of keywords in order to generate cost efficient click prices. Google is already gearing up to do this now, indicating the value in this space, as per my previous post.
CPC-CPC arbitrage has no value to anyone, except the arbitrager – the end user is irritated but doesn’t realize that they are generating money for the “pimp”. Â The additional landing page is of no value.
Regardless, we are left with a misnomer around what Clicks2Customers (CPC-CPA arbitrage) does, and what “Click-Pimpers” do.
My suggestions for names for CPA-CPC arbitrage are:
- Performance Search Marketing
- Affiliate Search Arbitrage
- Search Arbitrage
- Affiliate Arbitrage
With regard to CPC-CPC arbitragers – let’s just call them Click-Pimples and be done with it! 
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Comments On This Post
March 21, 2007 at 7:38 am
[...] My gosh, there are tons of people writing about this already (here’s the post on the Inside Adwords blog) — it’s dominating Techmeme. [...]
March 21, 2007 at 8:45 am
There are a number of other scenario’s which grey the landscape.
Here are 2 of them.
1. Affiliate Search Arbitrage where the affiiate uses the advertisers URL but doesn’t get paid on a cpa. They get paid on a cpc. Thus there is no risk to the affiliate, and it’s a question of getting as much good quality traffic that they can, so that the advertisers is happy with the traffic being sent and continues paying on CPC.
2. A combination of click-pimps and affiliate search arbitrage, where the affiliate uses there own URL, and the site they send the traffic to is professional AND adds value to the end user BUT the primary objective of the site is to arbitrage the clicks they’re buying with adsense. (although any other advertising instead of adsense would then be considered a normal business model monetized by advertising)
Hope you’re enjoying the trip.
Eric
March 21, 2007 at 6:45 am
There are a number of other scenario’s which grey the landscape.
Here are 2 of them.
1. Affiliate Search Arbitrage where the affiiate uses the advertisers URL but doesn’t get paid on a cpa. They get paid on a cpc. Thus there is no risk to the affiliate, and it’s a question of getting as much good quality traffic that they can, so that the advertisers is happy with the traffic being sent and continues paying on CPC.
2. A combination of click-pimps and affiliate search arbitrage, where the affiliate uses there own URL, and the site they send the traffic to is professional AND adds value to the end user BUT the primary objective of the site is to arbitrage the clicks they’re buying with adsense. (although any other advertising instead of adsense would then be considered a normal business model monetized by advertising)
Hope you’re enjoying the trip.
Eric
March 21, 2007 at 2:58 pm
Howzit Vinny
Good luck with the ‘virtual conference’… Cool seeing you again the other night. Have launched yet another blog (click on my name), nothing on it yet though, but watch this space. I’ve decided to make that my personal blog. Will send you some kudos once I’m up and running properly.
Cheers
D.
March 21, 2007 at 12:58 pm
Howzit Vinny
Good luck with the ‘virtual conference’… Cool seeing you again the other night. Have launched yet another blog (click on my name), nothing on it yet though, but watch this space. I’ve decided to make that my personal blog. Will send you some kudos once I’m up and running properly.
Cheers
D.
March 22, 2007 at 12:51 am
Vinny — very good analysis; we struggle with some definitional issues as well, most centered around the ambiguous word “arbitrage” which has I believe unfairly taken on a negative connotation associated with MFA sites.
Mike
March 21, 2007 at 10:51 pm
Vinny — very good analysis; we struggle with some definitional issues as well, most centered around the ambiguous word “arbitrage” which has I believe unfairly taken on a negative connotation associated with MFA sites.
Mike
March 30, 2007 at 11:42 pm
No kidding! My company operates in the intersection between the Search & Affiliate spaces, and one of the fears we constantly have to address with our clients is that affiliate attempts at arbitrage will damage their own Sponsored Search efforts.
In fact, I’m a little sorry I missed this conference… we exhibited at eComXpo 2007, so I was right there. On the other hand, we walked away with a couple of clients, so I’m not THAT sorry.
Anyway, I’ll take the liberty of offering our economic analysis of the practice. In brief, though: we called it Affiliate Arbitrage, and we’re in favor!
Beyond simply tolerating the practice, we push our clients to encourage affiliate arbitrage actively and to support it in any way they can.
March 30, 2007 at 9:42 pm
No kidding! My company operates in the intersection between the Search & Affiliate spaces, and one of the fears we constantly have to address with our clients is that affiliate attempts at arbitrage will damage their own Sponsored Search efforts.
In fact, I’m a little sorry I missed this conference… we exhibited at eComXpo 2007, so I was right there. On the other hand, we walked away with a couple of clients, so I’m not THAT sorry.
Anyway, I’ll take the liberty of offering our economic analysis of the practice. In brief, though: we called it Affiliate Arbitrage, and we’re in favor!
Beyond simply tolerating the practice, we push our clients to encourage affiliate arbitrage actively and to support it in any way they can.
July 23, 2007 at 5:48 am
As a newbie affiliate i always thought search arbitrage was a black hat technique. Finally got it !It’s CPC-CPA for me..
July 23, 2007 at 3:48 am
As a newbie affiliate i always thought search arbitrage was a black hat technique. Finally got it !It’s CPC-CPA for me..
September 10, 2007 at 7:05 am
My buddy told me about this blog, so I decided to check it out…
Pretty awesome!
Its pretty cool you did a seminar with Jeremy Palmer, he is one of my favorite marketers. I really like his book High performance affiliate marketing.
Keep up the good work.
September 10, 2007 at 5:05 am
My buddy told me about this blog, so I decided to check it out…
Pretty awesome!
Its pretty cool you did a seminar with Jeremy Palmer, he is one of my favorite marketers. I really like his book High performance affiliate marketing.
Keep up the good work.
July 26, 2009 at 1:09 pm
As a newbie affiliate i always thought search arbitrage was a black hat technique. Finally got it !It's CPC-CPA for me..
August 16, 2009 at 11:52 pm
thank you for sharing
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