Adsense Arbitrage - What is It, and Why Doesn't Google Like It?

First off, what is "arbitrage"?

According to Wikipedia, arbitrage is "the practice of taking advantage of a price differential between two or more markets". It's the act of buying something and instantaneously selling it for a higher price. As Wikipedia says, arbitrage is a "risk-free profit".

So what is "Adsense arbitrage", and how does it apply to the overall theory of arbitrage, which involves making a risk-free profit?

The first step in profiting from "Adsense arbitrage" is to make a "MFA" site. "MFA" stands for "Made for Adsense". A "Made for Adsense" site is a site that is set up in a way to maximize the number of times that visitors click on Adsense ads. There are many ways to do this - placing Adsense ads right underneath navigation bars, having pages with small blocks of text and large blocks of Adsense ads, etc. Basically a "MFA" site is clearly set up with the idea of maximizing Adsense revenues for the owner and not furthering the overall surfing experience of the reader. "MFA" sites may feature duplicate or indecipherable content that is not much use to the reader.

Now, the "MFA" is one side of the "Adsense arbitrage" equation. What's the other?

Adwords.

Now let's say that you have figured out that each visitor to your "MFA" site is worth 10 cents to you in revenues. For every 10 visitors that hit the site, one will click on an Adsense ad. For the sake of argument, each click is worth $1.00 to you.

Now, let's say that, after some testing, you realize that you can buy clicks on Adwords that will drive targeted traffic to your "MFA" site for 7 cents per click. Now, if everything goes according to plan and if people continue to click at the same rate, you will make a profit of 3 cents for every person that clicks on one of your Adwords advertisements and visits your "MFA" site. Now, three cents a click profit doesn't sound like very much, but if you ratchet that up to thousands of clicks per day, then you can start to see some pretty substantial profits.

Unfortunately for people taking part in "Adsense arbitrage", Google is not a fan of the practice. Last year they disabled a number of accounts that were making money this way. Sure, there are plenty of sites still operating this way, and more pop up each day, but Google is definitely still actively shutting down sites that make their money via "Adsense arbitrage".

Why isn't Google a fan of this practice?

1. Google wants to deliver as many high-quality clicks for their advertisers as possible, either through Adwords or the Content Network. If advertisers get thousands of clicks from a "MFA" site, they are not likely to be very impressed, and the clicks will likely be of a much lower quality. This hurts Google's reputation and will result in less advertising dollars in the system.

2. "MFA" sites increase costs to advertisers.

You can obviously see why Google wouldn't want their advertisers to be paying top dollars for clicks from shady "MFA" sites. It devalues the value of their entire network, and sucks dollars out of the available pool of advertising dollars. By ensuring that there are only high quality search and content sites in their network, Google is going to increase the amount of dollars spent by advertisers, plus reward publishers that produce high-quality and unique content.