Arbitrage is the practice of taking advantage of price differences between markets. Stockbrokers do this by buying in one country and immediately selling in another for a profit. Arbitrage can occur anywhere there is an inequality of demand and supply.
In the case of digital ad arbitrage, publishers make a profit by buying inexpensive AdWords tags and using them to drive traffic to their websites to increase the revenue from the higher-value AdSense ads on that site.
Arbitrage, AdWords, and AdSense
Some internet entrepreneurs use arbitrage to take advantage of the price difference between advertising keywords in AdWords and AdSense.
The process begins with someone buying an inexpensive AdWords campaign, Taboola Ads, and others, such as “cheap widgets,” for 10 cents. The ads direct anyone who clicks on them to a webpage that is optimized for a more expensive keyword, such as “expensive widgets,” for $5 per click. If even a fraction of the people who visit “expensivewidgets.com” click on the ads, the arbitrageur has turned a reasonable profit.
There is nothing explicitly forbidden about using arbitrage to profit from AdSense. Typically, though, it’s a technique employed by low-quality content producers, and Google has shut down some profitable accounts that were using arbitrage to earn profits.