More Marchex Arbitraging
I sent my traffic arbitrage post to folks at Yahoo and Google. It looks like the two examples I blogged about were removed from Google – I wonder if they found others.
After my blog post about Marchex’s arbitraging, additional examples were sent to me by another investor. Some of the ads were relevant to the queries below are relevant, others not. One example for “cups online” that takes the user to lensoutlet domain:
“Endoscopic” has an ad for siliconeimplant.com
“Job Information” has an ad for informationjobs.com
“Flight attendant” has an ad for bigemployment.com
“Atlanta jobs”, “Boston jobs”, “New York Jobs” has ads for bigemployment.com, sometimes
informationjobs.com (ad on the “more sponsored results” pages)
“Practice GED” has an ad for GED.com
“High School” has an ad for GED.com (ad on the “more sponsored results” pages)
“Plastic surgery” has an ad for siliconeimplant.com
In addition here is a trick to find more examples on Google partners:
1) Search for one of their domains with the following
format on Google:
+”www.breastenlargementcreams.com” +ads +by
2) Click on a cache link next to a result
3) Find the highlight text on the page with the URL
4) Notice the query that caused the ad to be served – many times it is not relevant
Other examples you can use in the same format
You will notice that while some of the queries that spawned these ads were somewhat relevant, many are not.
Should Google or Yahoo care about this recycled traffic? After all, YHOO, GOOG, MCHX all win in these situations because they all get paid. Users of Google search and Google’s partner sites lose because they are inconvenienced if they are taken to a place that doesn’t make sense to them – another page of paid links. The real loser may be Yahoo’s advertisers. If the traffic is not relevant, then their high priced ads won’t convert to customers.
I don’t know what Yahoo and Google plan to do, but if I were responsible for it, I would probably be doing a lot of investigating.
From Google’s perspective, I would:
- Take down the ads as I find them
- Investigate the other ads in same account to see if they are “real” sites and not paid link pages
- Search through all the accounts to find other Marchex domains to see if they have multiple accounts arbitraging at once
From Yahoo’s perspective, I would:
- Investigate the sources of traffic that Marchex provides via web logs, query logs, etc.
- Evaluate conversion tracking trends for Marchex’s pages over time as well as versus other more organic traffic on Yahoo.com for the same keywords
- Check Marchex’s contract and the Yahoo terms of service to see if this is prohibited
- Convene the Marchex account team to determine how to deal with it
- Ask Marchex to outline how widespread this is and to send over their traffic logs that might help fill in the gaps – who knows they might undercover other sketchy traffic sources
Back to the numbers. Who knows how much MCHX has spent arbitraging, but it is clear they are spending more on sales and marketing. Sales and marketing expenses have were $1.32 mil in Q1, $1.54 mil in Q2, and $2.76 mil in Q3. That’s a 79% increase. I wonder where that money is going.
I own puts on MCHX shares at various prices.