Advertising Arbitrage: Another Case Study in Death by Algorithm

The New York Times has an interesting summary of the demise of profits for a website called SourceTool.

The site was buying Google Adwords pay per click traffic to the tune of some 500,000 per month and then monetizing that traffic for a profit of about $110,000 per month using Google Adsense pay per clicks (where Google shares revenue with the site).   This form of PPC Arbitrage is no longer encouraged by Google – in fact I think this was related to the Comscore fiasco earlier this year, where Google announced fewer clicks and the Comscore analysis led to Google stock tanking until Google announced a higher revenue per click which made the stock soar.

SourceTool, along with a handful of heavy hitting online advertisers like Proctor and Gamble, has written in favor of the justice department denying Google and Yahoo’s proposed advertising partnership arguing that the combined Yahoo Google ad empire would control some 90% of the market.