Based on my sample, arbitrage ads appear to comprise the largest portion of Taboola’s advertising. In line with this discovery, this article will focus on types of arbitrage, who is behind arbitrage sites, problems with arbitrage, and solutions.
In later articles, I will review the additional aspects of arbitrage, non-arbitrage advertising categories, and business opportunities that Taboola ads present for media sites. If you've been forwarded this email, subscribe to my newsletter to receive these articles.
The Five Types Of Arbitrage on Taboola
Based on my survey, around 50% of all Taboola ads are likely purchased specifically for arbitrage. Arbitrage occurs when companies buy ads on other websites in order to make money from ads or affiliate links on their own websites. This finding should not be surprising to anyone who has clicked on a few Taboola ads and landed on a page of ads with a small article unit. It has also been covered previously. However, the high number of these ads in my sample demonstrates the sheer quantity of people doing this.
The image below shows an example collection of Taboola ads. Notice that three of the six ads are arbitrage: “Parents Who Got the Last Laugh,” “Early Signs and Treatments For Diabetic Nerve Pain,” and “19 Discounts Seniors Get Only If They Know.”
In this article, I will review five main types of ad arbitrage:
1) Slideshow Arbitrage: content, such as slideshows, that is solely focused on obtaining as many ad impressions as possible. On mobile, these ads are often converted into ad-filled listicles.
2) Direct Arbitrage: pages that are filled only with ads or links to other pages with ads.
3) Affiliate Arbitrage: pages that are filled with affiliate links or deliver users to affiliate links (such as an ad that links to “Top 10 Delivery Links”).
4) Search Engine Arbitrage: a search engine results page (such as an ad that links to “Track A Vehicle With GPS Search”) or a search engine homepage (such as an ad that links to TripsShop)
5) Ad Campaign Arbitrage: an ad campaign from a mainstream media site that likely needs to meet a traffic target (such as an ad that links CNN’s More To Incredible India campaign)
Slideshow Arbitrage
The slideshow arbitrage process generally works as follows:
1) You read an article on a popular news site
2) At the bottom of the article, you encounter a link to a slideshow. It could be titled something such as “These Twins Were Named ‘Most Beautiful In The World,’ Wait Till You See Them Today,” with an image like the one below:
3) You click. While that click initially costs the advertiser money, perhaps you continue to click through 50 different pages of the slideshow, each of which contains five Google ad units and sometimes Taboola ad units. Eventually, you may land on a page that is entirely filled with Taboola ads. After all of your clicking, the website has profited from the transaction.
Direct Arbitrage
Direct arbitrage happens when sites link directly to a page filled with ads or a page with list of links that each link to a page filled with ads.
For example, one Taboola ad that I came across in my survey linked to this SavingHub page filed with ads:
Here’s a website with a page of links, each of which link to a page of ads.
The sites listed below take a direct arbitrage approach:
Affiliate Arbitrage
Affiliate arbitrage happens when the cost of sending a user to a page filled with a list of affiliate links is less than the cost of the ads. An example of affiliate arbitrage is a Taboola ad that linked to this “Top 10 Best Dating Sites” page.
Similar to sites like The New York Times owned The WireCutter , these sites make money by sending people to purchase something with an affiliate link and taking a cut of the revenue. Affiliate arbitrage is not necessarily problematic if the website employing it is able to add significant value, beyond providing a list of affiliate links.
The following table lists some of the top affiliate arbitrage sites:
Search Engine Arbitrage
Search engine arbitrage, long the “bread and butter” of Ask.com, is the practice of linking to search engine results pages using an ad from another site. Ken Van Every, the Director of Programmatic Ads and Data Sales at Cars.com, suggested to me that this type of arbitrage may be driven in part by websites buying ads to search engine results pages in order to make their organic traffic appear larger than it actually is.
Brand
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Impressions
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URL
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Meal Delivery | Sponsored Links
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22
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https://search.yahoo.com/yhs/search?hspart=yahoo&hsimp=yhs-qo2&p=organic+meal+delivery+New+York
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Yahoo Search
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14
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https://search.yahoo.com/yhs/search?hspart=yahoo&hsimp=yhs-qo23&p=top+treatments+for+diabetic+nerve+pain&type=34105014
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Yahoo Search | GPS Tracking
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9
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https://search.yahoo.com/yhs/search?hspart=yahoo&hsimp=yhs-qo11&p=track+a+vehicle+with+gps&type=42439903
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Luxury Sedans | Sponsored Links
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3
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https://search.yahoo.com/yhs/search?hspart=yahoo&hsimp=yhs-qo11&p=New+York+deals+on+new+luxury+sedans&type=34179062
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Ad Campaign Arbitrage
Ad campaign arbitrage generally occurs when a website, often a mainstream media site, purchases external traffic to meet their ad campaign numbers
Who Is Behind These Arbitrage Sites?
Most arbitrage websites are opaque when it comes to providing any information about their ownership. They tend to be fairly cookie-cutter WordPress blogs and do not provide any identifying information.
One firm that is transparent about owning a number of arbitrage websites is Hive Media. On its company website, Hive Media claims to manage “400+ million pageviews every month” and to “adapt article and ad stack layouts to provide a highly-engaging user experience.” In my survey, I found ads from seven different websites owned by Hive Media: Idolator (long ago owned by Gawker), Give It Love, Trendchaser, PastFactory, Hooch, PostFun, and BuzzNet.
Hive Media’s Careers page, which has open positions for both a digital media buyer and slideshow creators, indicates that arbitrage is a major and growing part of its business. For example, the position description for “Freelance Content / Slideshow Creator” is as follows:
Ad Beat, a competitive intelligence tool for advertising, ranked Hive Media’s Trend Chaser as the #1 advertiser in the Art & Entertainment/Entertainment News & Gossip category and the 64th largest advertiser overall in ads seen in the last 30 days. Trend Chaser’s articles typically consist of long slideshows, such as this 64-page article on “Youngest Female Billionaires.”
Another major arbitrage site that has emerged in the past few years is Topix Stars, which originally hosted local community forums. Topix Stars is part of Topix and its major stakeholders include legacy media giants McClatchy, Gannett, and Tribune Publishing Co. According to AdBeat, Topix Stars is the #4 advertiser in the Art & Entertainment/Entertainment News & Gossip category and the 93rd largest overall in ads seen in the last 30 days. One example of a Topix article is “17 Stars Who Chose Adoption For Their Children,” which includes 113 slides and showed up 5,450 times during my survey. As noted by Van Every, Topix likely targets their ads to distinct URLs TopixStars.com and TopOffbeat.com to avoid having their main domain Topix.com blacklisted.
Problems with Arbitrage
On the internet, as in the world more generally, when there is a way for people to make easy money, crowds will flock to it. After all, if everyone is making money from doing a certain thing, what could be the problem with it?
Unfortunately, arbitrage presents several problems:
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Arbitrageurs pollute the internet with junk content and bad ad impressions
Writer time is spent creating derivative content, solely designed to generate ad impressions. Meanwhile, brands that are concerned about where their ads will appear are forced to spend time and resources identifying arbitrage sites and playing whack-a-mole with blacklists. Further, these sites don’t have editorial standards of most legitimate publishers. For an example of the negative repercussions of Taboola ads, see Gimlet Media’s podcast “An Ad for the Worst Day of Your Life.”
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Arbitrageurs who are promoted by legitimate media sites likely end up reducing the revenue for these sites
As the ads displayed increase, cost per thousand (CPM) for each ad tends to fall. Because the business model of ad arbitrage sites requires them to display more ads than they purchase, these sites reduce overall revenues for non-arbitrage sites. As such, eliminating or restricting arbitrage sites would increase revenue for legitimate sites, especially now that Taboola is not guaranteeing payment for using its ad module and the price of ads is determined by the market. While brands that advertise with Taboola may appreciate the lower CPM, they do not appreciate advertising on junk sites and end up paying to maintain large blacklists of junk sites.
What To Do
One possible solution to these issues would be to ban ads from the landing pages for Taboola ads, as Van Every proposed on AdExchanger. As Van Every notes, banning these ads would essentially destroy arbitrage sites and reduce the supply of ads. This would, in turn, raise the CPM for non-arbitrage sites that display ads.
Another solution would be for all major legitimate media publishers to create a blacklist of arbitrage sites and ban them from promoting content on their domains. This would also likely eliminate arbitrage sites and raise the CPM for non-arbitrage publishers.
Currently, ad networks like Taboola and arbitrageurs are incentivized to continue their practices. In order to make the proposed solutions possible, legitimate publishers and brands, who spend time blacklisting arbitrage sites, need to work together. Given that blacklisting arbitrage sites is, as Van Every describes, in “[the legitimate publishers] best interest from a long term revenue standpoint”, this option just needs more awareness from mainstream publishers.
Arbitrage Outside Taboola
Many of these sites not only use Taboola for arbitrage, but also use other content discovery networks like RevContent and other ad networks like Facebook. For example, you can see lots of Facebook ads aiming for arbitrage on the following pages:
https://www.facebook.com/pg/BoredomTherapy/ads/?ref=page_internal
https://www.facebook.com/pg/pastfactory/ads
https://www.facebook.com/pg/HistoryDailyPage/ads/?ref=page_internal
https://www.facebook.com/ninjajournalist/ads
https://www.facebook.com/pg/Trading-Blvd-1817165215251080/ads/?ref=page_internal
https://www.facebook.com/pg/PostFun/ads
https://www.facebook.com/WeightLossGroove/ads
https://www.facebook.com/pg/AutoVersed/ads
That being said, Facebook is nowhere near as dependent on arbitrage for ads relative to content discovery networks and arbitrage likely makes up a much smaller portion of their ads.
Table Of Arbitrage Sites
Below is a table of various arbitrage sites, most of which use slideshow arbitrage, the most common form of arbitrage.
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