PPC vs. Affiliate Arbitrage – Part 2

Perhaps not quite a soft spot, but we have long followed and had a strange affinity for various forms of arbitrage. It is, in many ways, a representation of life at large – the pursuit of easy money, the ultimate cat and mouse game, of one-upmanship. As mentioned in Part 1, we have often followed those performing CPA arbitrage – lead generators, ringtone affiliates, i.e. those who buy clicks and receive payment by selling user data. We have not as actively taken a look at those who buy clicks but receive payment when users go one step further, by performing a transaction often a purchase of a physical good. Here in Part 2, we explore the world of search arbitrage by affiliate marketers.

A. Coupon Sites – affiliate marketing has existed before paid search did, and the coupon site, one of the oldest iterations of affiliate marketing has existed almost as long as, if not before, affiliate marketing itself. Coupons sites occupy a unique niche. Those outside the affiliate space might not realize that the coupons on the site make the website owner money. As most of the offers promote specific products, the advertisers want to help affiliates so they provide incentives to the end user which in turn make their offer more compelling for the affiliate. Given the number of merchants, many coupon sites are actually quite sophisticated, true performance-based versions and the predecessor of comparison shopping sites. Many of the best search marketers got their start doing these sites and/or still do them.

#1
Coupons
Coupons from Over 2000 Merchants
Find Saving Deals & Save Today!
CouponPark.com

#2
10-40% off food coupons
Coupon codes for all of the top
online food stores at couponSeven
www.couponSeven.com
couponseven.com

B. EBay – eBay has had one of the longer standing and strongest affiliate programs. Theirs pretty much made Commission Junction and the auction marketplace’s affiliate managers like to point out how their affiliates make hundreds of thousands of dollars per month if not more than a million. We found two less conventional examples of eBay affiliates, ones that seem all to appropriate for an article about arbitrage, especially considering that the upper half of their pages look like Made For Adsense sites. eBay or MFA 2.0? Interestingly, these two are not owned by the same person, but we suspect they learned from each other, with one of them publishing an ebook on how to make money from online advertising. For whatever reason, though, eBay affiliates seem like a special group, which is why we separate them here versus putting them in with the single merchant category (next).

#1
John Deere Tractor
John Deere Tractors for sale.
All models, prices, new & used.
TractorUniverse.info

#2
John Deere Tractors
All Models of John Deere Tractors.
New & Used at Low Online Prices!
HeavySupplies.com

C. Single Merchant Affiliate – I wonder if these affiliates look at our CPA arbitrage and think, wow that looks tough, because I know that’s how I feel when I look at sites such as those two shown here. Each has the look and initial of full fledged merchant site, but click on any item, and you stay not on these sites but head off the merchants site for fulfillment. And, if I had to define what separates an affiliate site from a true store, it comes down to, on whose site does the transaction occur, and/or which party handles fulfillment. Neither of these sites processes the order; they do not have shopping carts, whereas SonyStyle.com, the site the user goes to upon clicking a product does both the order taking and fulfillment. Amazon.com affiliates, BestBuy, and almost every merchant’s affiliates fall into this group.

#1
Sony Vaio Vgn N320eb Sale
$250+ off Sony Vaio Vgn N320eb
Free Shipping & Upgrade. Ends Soon!
MyLaptopBargain.com/Sony

#2
Sony Vaio Vgn N320eb Sale
$250 & more off Sony VAIO N
now Free Shipping & Upgrades. Hurry!
Notebook-Bargain.com/Sony

In the end, both PPC and affiliate arbitrage look to make money by becoming an advertiser, an engine, and reselling that traffic to other advertisers. In the case of PPC, that resale occurs on a click basis whereas, in the affiliate world, it takes place on some action, usually a sale. They also differ in two other ways, level of content and merchants. PPC sites tend to have less content than affiliate sites, the links on the page are generally not determined by the affiliate but either by a parking company or based on the keyword coverage of whatever feed they pull. Additionally, in the PPC world, those marketing these sites have a relationship with an aggregater only. They might work with Yahoo directly or simply have Adsense ads, but they never have specific advertisers in mind, only topics. Affiliates focus on specific merchants, in the case of coupon sites, lots of merchants, or in the case of eBay or the Sony examples, just one program.

As we conclude our look at PPC arbitrage and affiliate arbitrage, two other issues arise that also plague the CPA world and threaten those running these sites.
A. Same Style – take a look at several of the examples in both Part 1 and here in Part 2, and you can’t help but notice how certain sites seem like clones of the other – a color change, perhaps a slight layout change, but nothing of substance. This detracts from the user experience, and in time will lead to both sites getting shut down if the engines have their way.

B. Same Merchant – in addition to several sites looking the same, several, especially here in the affiliate realm (the Yahoo arbitrage sites have their own issues) send their traffic to the same merchant. Whether eBay or especially Sony, the engines could easily call this double listing and seek to penalize these sites. Just like what happened in dating and in Blockbuster, even though different affiliates promoted the offer, Google simply saw Blockbuster appearing more than once. When that merchant is one of many, the issue seems less, which is why coupon sites, comparison sites, and big box retailers seem safe for now.

We’ll keep you posted as we see the landscape change. We welcome your thoughts.