Search arbitrage works like this:
You buy 100 visitors for $2.
You send them to a page showing search results, e.g. pay+day+loan, and hope they click on the ads.
The reason you send them to search results is because you can then force high value ads to display.
You hope enough of the visitors will click on the ads to generate a profit greater than $2.
So let's say the 100 visitors earns you $2.10. As you can see, you're making 10 cents for every 100 visitors.
You increase the traffic to 10,000 visitors per day.
Your daily profit will then be something like 100 x 10 cents = $10.
What we often see is search arbitrage is combined with click fraud to ensure a profit is made.