An illustration of how click arbitrage works is below.  Basically the website owner buys low cots clicks from long tail search works such, for example uk secured loans company, then displays to the user a page of search results for a similar, bu more expensive keyword, e.g. secured loan, as the publisher they get a percentage of click cost from the search engine whose results they dispay, and so long as CTR is at the right level, they make a profit.

Apparently though, it is still around, and some people are still able to make it work.  In a list of the December 2008 top advertisers by search engine, ranked by ad impressions, the number one Yahoo! Advertiser was business.com, the business directory site who’s direct source of income is the Adsense links it displays in each of its categories.

If business.com are making a profit on this activity, and you would assume they must be to appear in the list, they have got to be one of the last click arbitrage sites out there.  Many companies use PPC to drive page impressions and ad revenue but very few are still acting as middle man in this way and selling on the inbound traffic for a profit.

It also bring into question the solidarity of Yahoo!’s client base.  If their top advertiser, admittedly by impressions and not spend, is a business is built on this model what does it say about their future as a PPC provider.

The changes in Google’s gambling policy have already removed Yahoo!’s one advantage in the PPC stakes, and no doubt significantly hit its PPC revenues as gambling companies shift funds across to their Adwords accounts.  And now this announcement saying that one of their biggest advertisers is an affiliate!  It doesn’t fill me with confidence that they are going to be providing any sort of stiff competition to Google in the near future.

For me this is further evidence that a partnership/merger between Yahoo! And Microsoft is the only way true competition for Google is going to materialise.

According to the report 1 in 4 Britons were unaware that website owners were able to make changes to their website which would influence their position in the natural results and 22% believed that the natural SEO results were influenced by how much a company was paying to appear.

On the PPC front 1 in 3 respondents claimed to ignore sponsored links completely due to their commercial nature believing them to be “less worthy” and “less useful” than the natural search listings.

As a search engine marketing professional it is shocking to read the understanding of search in the UK is so poor but it does raise the question of what this means to the future of search engine marketing as consumers become more knowledgeable about search engine marketing. 33% of the respondents claimed to avoid PPC listings as they were less useful, but I would argue that they are less useful because the user does not understand them. I am fully aware of how PPC works but I still use sponsored listings when it suits my need. If my search is due to end in a purchase I am far more likely to use paid search listings as I know they will direct me to the most useful page and also contain details of any special offers available to me. However if my search is based around finding information I am more inclined to use the natural results as they will be less commercial.

As I also understand how natural search results work I am also more considered in how I view them. Rather than clicking blindly on the top results I take some time to read the results, check the URL and the listing content to decide which one is going to be the most useful. I am not going to rely on the search engine to decide which the best website is for me, I will make up my own mind thank you. I may even perform a second search before even clicking a link!

The results of this report suggest that consumer interaction with search engines could be changing over the next few years and companies engaging in search marketing are going to have to understand what this means to them. Is CTR going to drop on paid listings as users understand them more? Is position 1 in the search results going to mean less as people become more selective with what they click? Only time will tell.

Google’s site targeting function is another route into the vertical communities and this holds more benefits as it will be no more expensive, and possibly cheaper, than their standard network. It is effectively the Google content market bu with the ability to select the sites and verticals you wish to appear on, meaning you can choose those most targeted to your industry.

Vertical search marketing allows for more accurate targeting and potential higher conversion rates but it remains to be seen whether this will be the case for the time being, the jury is still out!

Vertical communities are ‘the future of social networking’
by Hayley Pinkerfield Revolution UK 18-Jun-07, 11:45
LONDON

The Association of Tennis Professionals (ATP) and 10Duke have launched the first tennis-dedicated online network, claiming that vertical communities will displace the likes of YouTube and MySpace.
The ATP is using 10Duke’s technology platform to take its existing offline community online. Users can upload footage to 30Love.net via online and mobile to show off their tennis skills. Tennis fans can access behind the scenes clips from the pro tennis tour, view exclusive player video clips and share photos, videos and personal profiles.
Etienne de Villiers, ATP executive chairman and president, said: “30Love.net will be the online home for everyone with a love for tennis and is the latest stage of our ongoing drive to ensure the sport remains relevant. Huge opportunities exist for our sport online and 10Duke’s social networking platform allows us to bring together the tennis community in a way that we have never been done before.”Michael Leavey, CEO of 10Duke, added: “This will be one of the first world-wide communities of its kind, based on a particular interest rather than general sites such as YouTube or MySpace. Vertical communities will be the future of social networking.”Chris Seth, MD of online teen network, Piczo, questioned the niche network business model: “It remains to be seen whether consumers have the time and inclination to visit multiple niche social networks online. The difficulty with a niche strategy is around being first to market. Piczo and others have gained critical mass to create a community and have a viable business proposition for brands.”
The 30Love.net site will launch at the start of Wimbledon with support from leading ATP Players, and will be promoted at ATP’s 63 tournaments this year.