Arbitrage in Advertising-Related Search

There is a fascinating discussion debate/underway between the folks at O’Reilly and various critics. The latter are claiming that O’Reilly’s sites are complict in search-spamming — the idea of raising a site’s ranking by gaming Google’s (and others) search algorithms. People used to do that sort of thing by hiding meta tags in HTML documents, and then there were link farms, and the latest twist is buying ads on high-profile websites, like O’Reilly’s, for the sole purpose of raising your own search ranking.

Why does that work? It works because pagerank means that when someone with a high page rank points to you that you must be important too. In other words, if there is a persistent link on an O’Reilly site to my site, and O’Reilly is highly-ranked (which it is), then my site ranking should go up in Google’s “mind”.

All of this breaks down, however, if people are paying for the link. If my important site is being paid to link to your less important site then you go up in ranking, but not based on merit. That, in effect, is what critics are saying that O’Reilly is doing, whether consciously or unconsciously, by running ads from various sites that really don’t expect click-throughs, that are only really hoping to benefit from being run on a site with a high pagerank.

As Tim O’Reilly rightly points out in a post today, this is really a kind of arbitrage. Because there is a mechanism for a mortgage broker, say, to raise their profile in Google’s searches — all they need to do is buy the right Adword. The trouble is, however, prized Adwords, like “mortgage”, have become very expensive, so people have creatively begun looking for other ways to raise their profile, thus leading them to the admittedly clever idea of paying a lower ad rate — arbitraging the different price of pagerank in related markets — to put a link back to their own site on a page with a higher ranking than their own.


  1. It’s interesting, although perhaps not unsurprising, that advertisers have found such workarounds. Although I have to admit, embedding ads on third-party web sites where the ads are mostly unrelated to the sites’ content for the purpose of fooling the web spiders and not the humans reading the site is a pretty creative solution.
    What’s also interesting is that the CEO of the company was unaware this was happening. Not that he’s asleep at the wheel but that these newfangled methods designed to decrease the cost of clickthroughs are so darn sneaky.

  2. I really like the idea of trying to understand the market dynamics of PPC advertising versus advertising on high PR sites versus achieving organic search visibility through building your own PR.
    Have you found other discussions of around this?