AdSense Arbitrage

Once you get to grips with the numbers that you see on the stats pages and
your logs, you might notice something interesting. You might see for
example, that you’re getting 5,000 ad clicks on a page each month and that
page is generating $1500.

Divide $1500 into 5,000 clicks and you’ll realize that each click for that type
of content is bringing you 30 cents.

That means that when you come to buy content, as long as you spend less
than 30 cents for a click to that page, you’re going to make a profit. And one
way to do that is to open an AdWords account and buy advertising space on
Google’s search pages. You could pay as little as 5 cents per click, giving you
a profit of 25 cents each time your 5-cent users click on your 30-cent ads.
That’s AdSense arbitrage and it sounds like a foolproof way to increase your
revenues.

If it were that easy, everyone would be doing it.
The first problem with arbitrage is that you can never get a 100% CTR. Not
every 5 cent click you buy is going to give you 30 cents back — and every
impression that doesn’t result in an ad click is going to eat into your profits.

With these kinds of figures (and obviously, yours are going to be different),
you’d need a 16% CTR to break even. (If every ad click costs 5 cents and
gives you 30 cents, you can afford to lose five out of every six clicks or
16%).

So if you can see that you’re getting a 16% CTR, buying advertising on
AdWords to send traffic to your AdSense ads could be a good deal.
Or not.

The second problem with arbitrage is that your CTR rate is based on users
coming from your current traffic sources. The users you buy through
AdWords might behave differently. They’ve already clicked on an ad once so
they might not want to click on an ad again.
Or alternatively, because you know they’re the type who do click on ads, it’s
possible that they’re exactly the type who’ll click on the ads on your page.
Results from using arbitrage vary. Some people report that the clicks they
buy on AdWords give them less revenue, others report that they’ve increased
their CTR.

The real key to arbitrage success is buying traffic based on the right
keywords. And to do that you need