Arbitrage is a technique used by publishers to get low-quality website visitors to click on high-value adverts, and as brought to light by the cybersecurity firm Polygraph, it’s working in a very similar way to click fraud.
But unlike click fraud, which is when the traffic statistics for an online advertisement are artificially inflated, arbitragers do not force the visitors to click on the ads.
Instead, they purposefully target naive internet users with clickbait ads, directing these visitors to unrelated, but high value, adverts on the publisher’s website,
Some of the visitors end up clicking on the ads, not fully understanding they are clicking on an advert.
“Advertisers pay an ad network like Bing Ads to display their adverts on publisher websites. Every time the ads are clicked, the advertisers pay fees to Bing Ads, and Bing Ads shares these fees with publishers,” explains Trey Vanes, Polygraph’s chief marketing officer.
“Click fraudsters are taking advantage of this system by creating scam publisher websites and generating huge amounts of fake clicks on the ads. This earns them hundreds of thousands of dollars each month, and can be devastating to advertisers, as the ad clicks are worthless, and never result in any sales.
“Arbitrage is very similar to click fraud. The publishers use clickbait ads to send low-quality traffic to their websites where the visitors are forced to view seemingly random adverts, and out of confusion, a percentage of these visitors click on the ads, earning money for the arbitragers and draining the ad budgets of advertisers.”
“The arbitrager’s entire scheme targets unsavvy internet users who don’t fully understand what they’re clicking on,” continues Vanes.
“By using purposefully terrible ads to attract visitors to their websites – think of adverts such as ‘One weird trick’, you’ve probably wondered why these ads exist – the arbitragers attract naive internet users who end up on a website which has nothing to do with the advert they clicked on.
“Unsure of what to do next, a percentage of these visitors click on whatever is in front of them – in this case, it’s a high-value advert.
“The main problem with this is these visitors offer little to no value to advertisers, so the end result is the advertisers pay for the clicks, and the ad network and publishers get paid. It’s a problem.
Unlike click fraud, which is illegal and sometimes results in criminal prosecution, arbitrage is legal and encouraged by many ad networks.
“We’ve spoken to people who used to work for arbitrage websites, and they told us the goal was to fleece advertisers. To make matters worse, the ad networks recommended which high-value adverts they should use, ensuring maximum profits for the ad network and arbitrager, and losses for the advertisers,” added Vanes.
Polygraph monitors the activities of click fraud gangs, learning the techniques they use to defraud advertisers, and how to prevent click fraud.
Arbitrage offers a new challenge, since it is legal and encouraged by many ad networks, however Vanes has one final piece of parting advice for worried advertisers:
“Most ad networks let you block specific websites from displaying your ads. Advertisers can use this tool to block arbitrage websites. Be aware that arbitrage companies try to get around this system by changing their website addresses and subdomains, so it’s important you continuously update the list as new arbitrage websites are exposed.”