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Parked.com's recent email to its customers restating it's no arbitrage policy should not come as a surprise. Obviously Parked.com needs to follow its contractual obligations and enforce Yahoo's guidelines.
What's troubling about this recent move is that it highlights the unregulated monopolistic behaviors of both Yahoo and Google. The bedrock of capitalism and a free market economy is that individuals can exploit inefficiencies in market place for a profit. This is precisely what arbitrage is.
Yahoo and Google both maintain that arbitrage ruins the user experience, drives up advertiser bid prices, clutters the web and interferes with search advertising in general. They couldn't be more wrong on all accounts.
Let me explain why. If an advertiser advertisers it widget on Yahoo's paid search results the advertiser expects to receive clicks and customers. Consumers on the other hand want to find products that they are interested in. A customer will click on a paid ad, such as the one mentioned above for the widget, and become a customer if it’s what he/she was searching for. This is where Yahoo's argument falls apart.
1st. Yahoo has a scoring system in place. If a person sends traffic to a parked page and gets a quality score of "10" then by Yahoo's on standards its the best traffic on the web.
2nd. the user experience is actually clean, simple and by its very nature ensures that only consumers that are interested in a product click through to the paid links.
Case in point; consumer goes to favorite blog on widgets, sees ad for widget, clicks on ad and lands on a two click parked domain. Consumer then narrows search and continues along the search path arriving at the paid links of the advertiser. If at this point they have found what they are looking for they will click on the ad and buy a widget. There is no correlation to quality of traffic, amount of sales or user experience and how the consumer arrives at the paid advertising link. In both cases, arbitrage and natural/type-in search, the consumer either purchases a widget or doesn’t regardless of how they arrive at the advertisement.
3rd. Higher bid prices for advertisers is a complete fallacy, if anything, arbitrage will lower the bid price. If an advertiser wants to get any sort of reach/traffic to a paid search ad it has to compete for one of the top 11 spots on Google (10 on Yahoo). This limited amount of inventory creates intense competition and drives up prices. When you introduce arbitrage to the model suddenly the advertiser gains from the expertise of the various entities on the web that specialize in delivering quality traffic. This influx of traffic allows advertisers the option of lowering their bid prices and receiving the same amount of traffic. The companies that do a good job of exploiting these inefficiencies should be rewarded in the form of profits.
Yahoo and Google don’t care about the user experience. They care about their profits. They care about stomping out any competition and creating a complete monopoly on the web. Their actions should be investigated by the FTC for violation of commerce and free trade. By trying to restrict advertisers to use only their search advertising or their content networks they are stifling innovation, trouncing on the rights of small business and attempting to eliminate competition (under the guise of creating a better user experience).
Screw Yahoo, Google, MSN and their whole little Oligopoly.
One final thought. I’ve already pointed out that how someone arrives at an advertisers paid link doesn’t affect quality. Why is it that these companies define arbitrage as redirecting WEB traffic to set of paid links? By this definition could I purchase advertising on radio, T.V., print, billboards, bathroom stalls, etc? They have somehow decided that all advertising is considered arbitrage and shouldn’t be allowed.
What's troubling about this recent move is that it highlights the unregulated monopolistic behaviors of both Yahoo and Google. The bedrock of capitalism and a free market economy is that individuals can exploit inefficiencies in market place for a profit. This is precisely what arbitrage is.
Yahoo and Google both maintain that arbitrage ruins the user experience, drives up advertiser bid prices, clutters the web and interferes with search advertising in general. They couldn't be more wrong on all accounts.
Let me explain why. If an advertiser advertisers it widget on Yahoo's paid search results the advertiser expects to receive clicks and customers. Consumers on the other hand want to find products that they are interested in. A customer will click on a paid ad, such as the one mentioned above for the widget, and become a customer if it’s what he/she was searching for. This is where Yahoo's argument falls apart.
1st. Yahoo has a scoring system in place. If a person sends traffic to a parked page and gets a quality score of "10" then by Yahoo's on standards its the best traffic on the web.
2nd. the user experience is actually clean, simple and by its very nature ensures that only consumers that are interested in a product click through to the paid links.
Case in point; consumer goes to favorite blog on widgets, sees ad for widget, clicks on ad and lands on a two click parked domain. Consumer then narrows search and continues along the search path arriving at the paid links of the advertiser. If at this point they have found what they are looking for they will click on the ad and buy a widget. There is no correlation to quality of traffic, amount of sales or user experience and how the consumer arrives at the paid advertising link. In both cases, arbitrage and natural/type-in search, the consumer either purchases a widget or doesn’t regardless of how they arrive at the advertisement.
3rd. Higher bid prices for advertisers is a complete fallacy, if anything, arbitrage will lower the bid price. If an advertiser wants to get any sort of reach/traffic to a paid search ad it has to compete for one of the top 11 spots on Google (10 on Yahoo). This limited amount of inventory creates intense competition and drives up prices. When you introduce arbitrage to the model suddenly the advertiser gains from the expertise of the various entities on the web that specialize in delivering quality traffic. This influx of traffic allows advertisers the option of lowering their bid prices and receiving the same amount of traffic. The companies that do a good job of exploiting these inefficiencies should be rewarded in the form of profits.
Yahoo and Google don’t care about the user experience. They care about their profits. They care about stomping out any competition and creating a complete monopoly on the web. Their actions should be investigated by the FTC for violation of commerce and free trade. By trying to restrict advertisers to use only their search advertising or their content networks they are stifling innovation, trouncing on the rights of small business and attempting to eliminate competition (under the guise of creating a better user experience).
Screw Yahoo, Google, MSN and their whole little Oligopoly.
One final thought. I’ve already pointed out that how someone arrives at an advertisers paid link doesn’t affect quality. Why is it that these companies define arbitrage as redirecting WEB traffic to set of paid links? By this definition could I purchase advertising on radio, T.V., print, billboards, bathroom stalls, etc? They have somehow decided that all advertising is considered arbitrage and shouldn’t be allowed.
