The arbitrage players are just the “bees” who find the holes in the market and making it smooth. Arbitrage is everywhere, in sport bets, in commodities market and that’s ok. It’s just how the market works imho.

Serge

I agree it is fair that it happens, and used to play the game myself, but I think the option to opt out of these sites either by a true yahoo search only option or negative domain filtering is the answer.

Either the advertiser splits his supreme profits with the “bee” or he’s lowering the bid. Noone will spend money on this if it doesn’t make profits.

So it’s just the matter of time for some niches IMO.

Well the top players are playing two markets, the lower tier ones are playing a single market… I think those playign the two have the advantage and the advertiser will see notice less than those in the single market.

I think PPC is still profitable and many businesses have grown because of the traffic, they can not afford to cut it off, but lower margins as the prices go up is a side affect that they are dealing with.

Arbitrage by definition involves a time limit so I agree with you there… I thought we would have seen less of it by now, but I am suprised how wide spread it still is. The only reason a search engine would stop allowing it is they feared they would lose customers because of it. It is profitable for all involved, except for the ones funding it…the adverisers.

Google supposedly tweaked its adwords algo to tighten down on landing page quality so we will see how that affects everything.
http://adwords.blogspot.com/2006/07/landing-page-quality-update.html