Funnel

A funnel describes a journey in which some people drop out at every step, so it is wide at the top and narrow at the bottom. In search arbitrage a common funnel has four steps: the visitor sees an ad, clicks through to a landing page, clicks a keyword, then clicks a sponsored listing.

Each step has its own rate. The ad has a CTR. The lander has a Lander CTR. The results page has an Ad CTR. Multiply them together, and by the payout per ad click, and you get revenue per visitor (RPV). Improving any one step lifts the whole.

Funnels are named by how many clicks the visitor makes after arriving. A two-click flow needs a keyword click and then an ad click. A one-click flow shows ads straight away. Zero-click parking forwards the visitor with no click at all.

Shorter funnels lose fewer people, but each click a visitor chooses to make is evidence of interest. Removing steps tends to raise volume and lower quality, which is why engines regulate funnel design closely.

An example

Say 1,000 visitors arrive. 45% click a keyword (450) and 60% of those click an ad (270). At $0.50 per ad click the funnel earns $135, an RPV of $0.135.