Search Arbitrage's Friday the 13th
At one time well north of 15% of Google's total revenues were coming from search arbitrageurs, people who were buying tons of low-CPC Google traffic and sending it to pages full [usually] of higher-CPC Yahoo ads.
Put another way, up until mid-2007, the percentage by which Google regularly trounced guidance and added tens of billions of dollars to their already-$100B+ market cap was coming mainly from a Panama Canal of sorts connecting two CPC oceans of different elevations and operated by marginally savvy but seriously greedy hombres.
Google eventually decided that *it* wanted to be the only firm printing money from search, and so on Friday April 13th Google did a huge manual crackdown on many of the largest search arbitrageurs, raising their minimum bids to unsustainable levels overnight.
One such casualty was Canadian firm Geosign, whose life-then-death story was recently chronicled by the Financial Post. It's rare search arbitrage gets covered by the mainstream press, and they did a very good job explaining the relationship between the rise of AdSense and search arbitrage. The article has one big fault, however; namely that it attributes Google's search arbitrage smack-down to G's desire to protect advertisers. My very strong opinion is that Google got rid of arbitrageurs because it realized that doing so would forcefully redirect the low-CPC clicks they were getting to higher-CPC ads.
It's ironic but fitting that Yahoo's code name for its revamped search system was 'Panama', when the real Panama Canal of Search was actually epitomized by the likes of Geosign. It's *also* ironic that the image on American Capital's PR announcing their $160M investment in Geosign is called...the Geosign Tombstone.