I thought this might be useful to those wanting to try keyword arbitrage. From the Wikipedia “In economics and finance, arbitrage is the practice of taking advantage of a price differential between two or more markets: a combination of matching deals are struck that capitalize upon the imbalance, the profit being the difference between the market prices.”

This is an example using the Google Adwords and Google Adsense market exploiting the differential between the two:

This is my Adsense earnings for one page optimised for a particular keyword for February 2008.

Pageviews: 3,279
Clicks: 752
CTR: 22.93%
CPM: $35.45
Earnings: $116.24

The CPM is a very important figure as it shows how much 1000 page views are worth. In this case it is $0.035 or approx. £0.0175 per pageview, so if I can get relevant traffic for less than this I will make a profit. It is that simple.

Now this is just one page, the site has other related pages with similar profiles and I know from the web statistics that visitors on average will visit three pages, so in actual fact a visitor is worth approximately $0.10 cents or £0.05 as the CPM is similar across the whole site and I don’t want to be paying more than that per visitor.

I have set up a Google Adwords campaign to send targeted traffic to this landing page and I don’t really want to spend more than a maximum of £0.05 per click as this is the value in Adsense terms of a visitor to the site and I would like to make some profit, so I have set the maximum CPC at £0.03.

This Adwords campaign gives:

Impressions: 24,675
Clicks: 1,618
CTR: 6.55%
CPC: £0.02
Costs: £33.59 (approx. $67)

If you do the maths you’ll see that this page makes me about £25 per month which isn’t much. When you take into account that only half the traffic comes from Adwords, you could come to the conclusion that campaign only just about breaks even. However, on this site the visitors will go on to visit two other pages on average with similar click-through rates. And of course your site may not be just made for Adsense it might actually have some value and you may be able to put other values against the costs of a pageview. For example, how much is an e-mail subscription worth to you? How much is an enquiry worth? How much is a new forum member worth? Etc.

I must admit that this is not the most profitable niche in the world. The trick is to choose something where the advertisers bid up the CPC and the CPM and you can get traffic that converts well at a much cheaper price. Good luck

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