What is search arbitrage?
Search arbitrage is a business where a publisher buys visitors cheaply, usually with ads on social or native networks, and sends them to a page showing search ads supplied by Google, Bing or Yahoo. When a visitor clicks one of those search ads, the publisher is paid a share. Profit is the gap between what a visitor costs and what a visitor earns.
Think of a market stall holder who buys apples wholesale at 20p and sells them at 30p. In search arbitrage the "apple" is a visitor's attention. The publisher buys it as paid traffic from a traffic source, and sells it by showing sponsored listings from a search feed. The difference is the spread.
The precise version: the publisher (or a feed provider on its behalf) holds a syndication agreement with a search engine. Advertisers bid in the normal ad auction, their ads appear on the publisher's page, and each monetised click is shared between the search engine, the feed provider and the publisher. The whole thing only works when revenue per visit stays above cost per visit after clawbacks.