Where the advertiser’s dollar goes

Follow $1.00 of search ad spend from the advertiser through the search engine and feed provider to the arbitrageur, and on to the traffic source.

1. An advertiser pays for a click: Someone clicks a sponsored listing on an arbitrage page. The advertiser’s account is charged $1.00. Every figure in this flow is an example: real shares differ by contract and most are confidential.
2. The search engine takes its cut: The engine supplied the advertisers, the auction and the billing, so it keeps a slice first. Say it keeps $0.30 and passes on $0.70. What it pays out to partners is its traffic acquisition cost.
3. The feed provider takes its cut: Most arbitrageurs do not contract with the engine directly. A feed provider does, and shares the feed onward for a revenue share. Say it keeps 20% of the $0.70: $0.14.
4. What the arbitrageur receives: The arbitrageur gets $0.56 for that ad click, its RPC. Only about half of its visitors click an ad, so average revenue per visitor (RPV) is $0.28. That is its gross revenue.
5. Most of it was already spent: Each visitor was bought from a traffic source for $0.20, paid up front. So the largest single share of the arbitrageur’s income goes straight back out to an ad platform.
6. The spread: $0.28 in, $0.20 out: $0.08 per visitor is the spread, before staff, tools and content costs. Out of the advertiser’s dollar, the business that built the page keeps the thinnest slice and carries the most risk.
7. Invalid clicks unwind the chain: If the engine later decides a click was an invalid click, it credits the advertiser and nobody downstream is paid for it. The arbitrageur sees that as a Clawback (revenue deduction), even though the $0.20 spent on the visitor is gone.