Search Arbitarge = Naked Greed

There a have been a number of recent articles examining the positive and negative effects of search arbitrage. The practice, the search marketing version of bait-and-switch, is a testament to the greed that abounds online.

Email spam and its ugly cousin search arbitrage are reprehensible practices meant to line the pockets of their practitioners with no consideration of the consequences.

The typical search arbitrage experience manifests itself when a click on a PPC ad lands the searcher on a page of more PPC ads. What purpose does that serve other than to make a “publisher” a quick buck? Absolutely none!

InvestorWords.com defines arbitrage as: “Attempting to profit by exploiting price differences of identical or similar financial instruments, on different markets or in different forms.”

The keyword here is “exploiting” which TheFreeDictionary.com defines as: “The act of utilizing something in an unjust, cruel or selfish manner for one’s own advantage.”

No kidding!

I’m reminded of the 1987 hit movie, Wall Street, where Gordon Gekko proclaims “Greed is good!”

Search arbitrage fuels the fires of bid inflation as legitimate businesses struggle to maintain their position on the SERPs as they react to artificially high bid costs. Bid costs are getting to the point that small businesses are getting squeezed out of the PPC marketplace because they can’t afford to compete with the Wal-Marts of the world.

The search engines are in a tough spot in regulating such abuse. If they come down too hard on the practice their bottom line may suffer due to fewer clicks. But that’s short-sighted. Nail the bastards to the wall and gain back the trust and respect of legitimate businesses and search engine users. Greater profits will follow.

To be fair, Google continues to move forward with algorithm changes aimed at improving user experience. And in my experience, Yahoo has been very willing to investigate suspicious click activity in a timely manner.

These are commendable actions, but why stop there? How about proactively banning search arbitrage practitioners to protect legitimate advertisers. The search engines should examine what will truly benefit them in the long term, not just the next quarter.

Enabling the fantasies of exploitative Gordon Gekko wannabee “publishers” will certainly alienate those who are the life blood of future success.