Catherine Seda (prolific writer, industry vet, and business columnist for Entrepreneur Magazine) covered a panel that I participated in during the recent Search-Engine Strategies conference in San-Jose, CA.  Here is a LINK to the article that was posted today on Search Engine Watch.

Catherine goes on to explain the traditional definition of “Search Arbitrage” by referencing the stock market.  Here’s what she said:  “Skilled traders of bonds, commodities or other equities often leverage their bets using arbitrage to take advantage of price differences in the marketplace. With a bit of creativity, you can use arbitrage to profit from price differences in search engine advertising programs.”

The goal of this post is twofold.  First, I want to draw a line in the sand (a contrast if you will) between “bad” Made-For-Adsense (MFA) search arbitragers and legitimate, sophisticated search-engine marketing affiliate arbitragers.  Second, I will argue that Google’s recent paid search algorithm tweak that uses an automated “landing page quality score” to influence CPC prices of search arbitragers unjustly affects SEM affiliates. 

From an affiliate perspective, search arbitrage is when an affiliate marketer buys their own ads on Google, Yahoo and the like in hopes that they can turn the traffic into profit by converting that traffic into affiliate sales.  Since the affiliate marketer gets paid on a performance basis, if they can pay less for traffic than they get in commissions, they make money – at Pepperjam, we break this money making strategy down into a simple concept called “playing the spread” – the spread is defined by the difference between the amount you spend on the engines and the amount you make on Commission Junction, Linkshare, Performics, Digital River, etc.

Catherine does a nice job giving a brief overview of search arbitrage, and she does use my comments to explain that there IS A MAJOR DIFFERENCE between search arbitragers who use made-for-adsense websites (MFA’s) to arbitrage and search-engine marketing affiliates who provide significant value to merchants and consumers alike.  Let me explain what I mean, briefly.

MFA website advertisers do nothing more than confuse the consumer by purchasing ads on Google, Yahoo, etc. and sending the traffic to a dedicated page serving Google Adsense / Yahoo Publisher ads.  The MFA advertiser makes money by purchasing “inexpensive” traffic and sending the traffic through MFA pages that contain high paying Google Adsense or Yahoo ads.  Does this work?  From what I understand the top MFA advertisers have made millions per month.

The huge problem with MFA websites is that they provide the user (the individual using search to find products, services, information) with a list of irrelevant ads.  The MFA advertiser recirculates ads not to provide the user with more accurate results or similarly relevant results, but with ads that pay them more money on the publisher side.  If you read the article at SEW here, you’ll see that I actually side with Google in that these kinds of search arbitragers aren’t good for search.

However, I also argue that Google’s attempt to eliminate MFA affiliates has unfairly caused serious collateral damage to search-engine marketing affiliates.  In fact, in many cases legitimate affiliate marketers (the folks who use Commission Junction, Linkshare, etc. to generate sales for merchant partners) have been required to pay as much as $10-15 dollars CPC or have all ads associated with the campaign deactivated. 

How can Google do this?  Well, as part of Google’s recent change to their paid search algorithm, which was supposedly meant to eliminate /minimize MFA advertisers, Google now has what they refer to as a “landing page quality score” that factors into whether advertisers have to pay .35 cents (for example) or $10 (for example) for the same keyword.  In this regard, Google clearly oversteps the intention of the new rule and in the process creates an unacceptable number of false positives (advertisers unjustly affected by the change in that they clearly have “high quality” landing pages and are not MFA websites.)

We will save the topic of what constitutes a quality landing page and what doesn’t for another time – however, I will say that if search-engine marketing affiliates are making money by sending traffic through a landing page that CONVERTS into a sale for a merchant, the landing page is likely of high quality.  Think about it - profitable search engine marketing affiliates are sending traffic to landing pages that are promoting specific merchants, products & services – the only way to do this profitably is to send the most relevant and inexpensive traffic you could buy to the most relevant merchant offers?  Clearly, this is different than what the MFA advertisers are doing.  The MFA scenario has almost no value to the user and the SEM affiliate situation provides great value to the user…in fact, in many cases the search-engine marketing affiliate is more sophisticated than the merchant themselves.  How can this be possible – think about it, affiliates have a smaller “spread…aka, profit margin” and therefore are forced to focus on only connecting targeted traffic with relevant products and services.  I can go on and on about this major difference between MFA search arbitragers and search-engine marketing affiliate arbitragers, but I think you get the point…

FYI: Fellow Pepperjam Blogger Michael Jones recently blogged about this topic over at ReveNews.com.  Also – check out ShoeMoney’s controversial blog post on this issue HERE.

Caryl Felicetta from over at ReveNews.com made a post recently about a free video that is being distributed over on Google Video. The VIDEO FOUND HERE is from a lecture that Sergey Brin, Co-founder of Google, made at UC Berkeley.  Sergey addresses a class and talks about some pretty cool topics such as Wikipedia, Google PageRank, Google Adsense, Scalability of Search, Life, Google and more.  Is this video great?  In my opinion – NO – but it is worth it just to see Sergey in action – this guy is definitely one of the top visionaries of the last 10-years – He and Larry Page have created what I believe will become the most powerful company in the world.

Just an FYI that our friend Jeremy Schoemaker’s Blog – Shoemoney.com - will be featured on the Friday October 13th edition of ABC’s 20/20 at 10:00pm EST.  The producers of the show asked Jeremy not to disclose the topic to the public…even though Shoe did tell us what they will be covering during a call we had with him a day or two ago.  All we can say is that you should tune in on the 13th to see Shoes’ blog – Jeremy’s influence in the blogging community goes without saying, but when you get a shout out on 20/20 – that is a whole different situation.

Hot off the press! Superstar Terrell Owens attempted suicide Tuesday night. Many news sources are saying that he had taken roughly 35 pain pills because he was “feeling depressed”. As of right now the details are scarce but here is what we do know.

“Flamboyant Dallas Cowboys receiver Terrell Owens attempted suicide by overdosing on pain medication, even putting two more pills into his mouth after fire rescue personnel arrived.”

“The worker attempted to pry them (the pills) out of his mouth with her fingers, and then was told by Owens that before this incident he’d taken only five of the 40 pain pills in the bottle he’d emptied. The worker then asked Owens “if he was attempting to harm himself, at which time (he) stated, ‘Yes.”

So essentially before he attempted suicide he had only taken 5 pills out of the bottle, then last night he swallowed 35 pills. Seems he was pretty serious.

We here in Pennsylvania have a slight grudge against TO being that he caused all that turmoil and distress among team mates on the E-A-G-L-E-S, Eagles. So for the most part I will keep my mouth shut about the issue, but I will say that once again we are seeing the curse of the Dallas Cowboys. Every superstar that goes there ends up on drugs or something equally as career destroying. So to T.O., get better, to all the fantasy football players out there who had him on their team, HAHA!

Best,

Dean

Well – I was checking out the shoemoney.com blog this morning as normal and literally fell off my seat when I saw this photo of shoemoney as Dr. Evil – hilarious.  Despite the magnificent display of photoshop skills by blackbeard, the message of Shoe’s post was not lost – this idea that the most successful SEO’s use a nice blend of “white hat” and “black hat” is central to understanding SEO and making money online through search engines.  Clearly, if Matt Cutts from Google is interested in asking questions of Shoemoney, DaveN, and other experts, there is a realization on the part of Google that respect and courtesy must be given to those professionals who help define an industry.

What is blackhat?  This is a good question that doesn’t have an easy answer.  Is link building blackhat?  What about buying links versus negotiating for them directly?  Is there a point where link building becomes blackhat?  Sure, but that limit isn’t well defined.

What is whitehat?  Anything that isn’t blackhat.  What is blackhat?  Like I said that’s a good question.

The rhetorical nature of this brief post is meant to lead you to conclude exactly what Shoemoney suggests: SEO is an art that represents a nice blend of any and all skills that can lead to a consistent top ranking on the search engines.

Hello to everyone reading this right now, My name is Dean Karasinski. This is my first official/inaugural Pepperjam Blog post. I am very excited to have the opportunity to write for Pepperjam and hope to have some fun with it.

In this first edition I would like to address something that is becoming more and more popular on the internet, the phenomenon known as social bookmarking. In the “olden days” of the internet you would bookmark all of your favorite sites either for your own entertainment or to share with your friends at a later date. Often times these bookmarks went to waste, meaning that you never got around to what you initially intended to do with them, which is to show them off to your friends to see who could find better “stuff”.

Book marking is a whole different ballgame on web 2.0; you could essentially say that it has gone multiplayer or MMO. Sites like Digg, del.icio.us, Listable and Furl have a huge user base and the content changes on a daily basis thanks to everyone contributing their bookmarks all the time. The up and comer, that I personally enjoy the most, Stumble Upon is by far the most amusing. It essentially works like channel surfing for your computer and is a plug in for that hip browser Firefox. First you download and sign up for Stumble Upon then select from a list of topics that interest you. After that, finding an interesting site is done with the click of a button on the toolbar. When you are taken to a site you can then press the thumbs up or down button depending on whether you like or dislike the content you are shown. If you like the it, Stumble Upon will fetch sites for you with similar content and from according to the categories you chose earlier.

While this is great for entertainment purposes it also poses an interesting question; can social book marking be used as an advertising tool? My initial answer to the question would be no since it is primarily based on user submissions. The users tend to weed out or disapprove sites that aren’t of interest to them or that they perceive as spam/advertisements etc. If done right however, social bookmarking sites can be a powerful advertising tool. The trick is to have the right kind of content. The reason people are using social bookmarking is to find new things on the internet, not the same old, boring, template driven, rehashed sites. For instance, on M&M’s site, for Halloween they have put up a puzzle with 50 hidden horror movies. The trick is though it is a visual puzzle based on clues within the picture. (Check it out to see what I am talking about).

The bottom line is that social bookmarking is very popular right now and finding the next cool thing is something that a lot of people are driven to do. This is a huge opportunity for advertisers to capitalize on some of their ideas that might be outside of the box, have content driven towards a smaller or niche demographic or they simply have no other place to put it. It can be a very powerful tool for advertisers to add to their already huge list of places to advertise on the internet.

On that note let’s see some places that I have found using Stumble Upon:
ZunaFish

Light Emitting Shirts

Disney and Dali

A new day in affiliate marketing is upon us.  The fact that Commission Junction (CJ) has been the first major affiliate network to launch a developers network, allowing developers to access CJ’s API, is revolutionary.  In my opinion, this is the single biggest step taken by CJ on any level since they purchased BEFREE.  See – Google and Yahoo have opened up their API technology to developers and as a result companies have been able to build custom software solutions that enable streamlined access and more effective account management, including the creation of cool tools such as bid automation to ROI-based bidding.

The fact that CJ opened up their feed gets me super excited for numerous reasons.  First, access to CJ’s API will allow us to build more sophisticated “real-time” software bringing together commission reporting and paid search-engine marketing…While we have tools internally that we’ve been using for years to assist us with this, accessing CJ’s API opens up the doors in a big way.  Second, CJ’s API will allow us to more effectively pull and manipulate product feeds for the Pepperjam Comparison Engine.  In addition, we will build technology around the API so that we can truly automate merchant product feeds as it relates to in-stock / out-of-stock inventory and pricing changes.  In short, CJ’s initiative is a revolution of sorts as it relates to affiliate marketing product feed technology.

Finally, CJ’s API opens up the door to affiliates by creating a new opportunity for affiliates to build businesses.  For instance, can’t you imagine using RSS to send updates whenever a price drops or a merchant updates their feed with special offers, coupons or deals.  While some of this technology already exists, it will make it easier for the above-average affiliate to differentiate and make money.  Moreover, what about creating software that notifies you whenever some specified occurence happens within your CJ account.  For instance, a merchant reverses an order, a commission is generated through a product catalog link, you begin generating inactive (dead) links, you receive an internal CJ e-mail, etc.  Can’t you imagine setting-up a system that allows you to receive automated reports…or notification that payment has been made.  What if you’re a merchant?  Maybe you want to be notified when your balance reaches a certain level or an affiliate joins your program.  Maybe you want to communicate with CJ when a particular product goes out-of-stock or when the price of a product changes?

The possibilities are almost endless for affiliates and merchants alike.  Good job CJ!

CLICK HERE to check out and register for CJ’s Web Services.

While in past years Pepperjam has sent as many as (7) seven members of our staff to CJU, this year we only sent two – our affiliate director Brock Siegel and one of our senior affiliate managers Tara DeGiusto.  Brock and Tara flew out of Philly on Saturday morning and arrived in Santa Barbara to find that Brock’s luggage was lost in transit – fortunately, Brock got his luggage the next day.  From what I’ve heard, Brock and Tara attended all the party’s and most of the educational sessions and had a blast overall.  In addition, as always, I heard the Fess Parker resort was beautiful – if you haven’t seen it before – it is amazing – located so conveniently across the street from the beach.  Anyway, tomorrow should be interesting since Brock and Tara are taking a red-eye (their choice, not mine) tonight and expect to be back in the office early tomorrow morning.  I guess this will be the last official affiliate conference of the year – Affiliate Summit is next in January.  We’ll see you there!

Pepperjam, the industry’s leading full-service internet marketing firm, is looking to recruit the best and brightest from the online marketing world.  If you are an existing affiliate manager, search-engine marketing manager, media buyer / planner, or a kick-ass online marketer, why not consider joining the Pepperjam Team?  Come see what it is like working for one of the fastest growing and most progressive internet marketing firms in the United States.  Competitive salaries and benefits are included with all new hires.  We are looking to immediately hire 10 – 15 full-time employees in the following areas (please note that all positions require re-location to our Wilkes-Barre, Pennsylvania Headquarters):

Senior Search-Engine Marketing Managers:

We are looking for a minimum of 1-2 years of experience with PPC marketing on Google and Yahoo.  If you are a Google Adwords Professional and / or Yahoo Search Marketing Ambassador that’s a plus – if you’re not, we will train you and pay to get you certified.  pepperjamSEARCH clients include the Wharton School of Business – UPENN, Baby Phat, DKNY, 1-800-PetMeds, JLo – Jennifer Lopez, Apple Bottoms by Nelly and many more.  Please send your resume to fshroff@pepperjamsearch.com.

Learn more about SEM opportunities at Pepperjam HERE.

Senior Affilate Managers:

We are looking for a minimum of 1 – 2 years of experience with managing one (1) or more programs on either Commission Junction, Linkshare, and / or Performics.  If your experience does not meet our minimums, but you are a proven affiliate marketer, we would love to talk to you.  pepperjamMANAGEMENT clients include 1-800-PetMeds, Baby Phat, Anthony Robbins, igourmet, Rocawear by Jay-Z, House of Dereon by Beyonce, Brigade Quartermasters, and many more.  Please send your resume to brock@pepperjammanagement.com.

Learn more about Affiliate Marketing opportunities at Pepperjam HERE.

Senior Media Managers:

We are looking for a minimum of 1 year of experience with purchasing online.  Our clients include leading brands across all areas of e-commerce.  Please send your resume to maggie@pepperjamsearch.com.

Learn more about Media Management opportunities at Pepperjam HERE.

Senior Programmers:

We are looking for a minimum of 3 – 5 years of advanced programming experience in developing applications related to online marketing.  We have several ongoing projects that require advanced experience with PHP, AJAX (and other languages).  Please send your resume to tim@pepperjamsearch.com.

Learn more about Programming opportunities at Pepperjam HERE.

Industry insiders should apply.  Industry executives should apply.  Motivated applicants should apply.

Click here to see pictures of the “Pepperplex” taken during a recent visit by industry vets Jeremy Schoemaker (aka, Shoemoney) and Dave Dellanave (aka, Dillsmack).