Pay-Per-Action (beta):

[clasione]

Pay-Per-Action (beta):
Pay only for actions that you define.
http://services.google.com/payperaction/

[bronzgevaar]

Potentially bad news for publishers.

Lets say that first-tier affiliate programs (like adsense) have an average conversion of anywhere from 8-10%. Any fluctuation with CPA conversion rates (and I've not heard any strong arguments that they will be higher) will mean definite turmoil for CPC Affiliate programs. Bids will change everywhere on both advertising schemes and the door is wide open for fraud.

And I believe, though I'm not sure, that users can define what an "action" is - who's to say they won't define a click as an action, thus making all the PR Google is telling their advertisers about the benefits of PPA fluff?

And what if the advertisers get to decide what an "action" is, thus deciding which clicks they'll pay for? Alarm bells should be ringing for publishers everywhere.

Just wait til Google incorporates this into their toolbar and EVERY click that brings in a sale (whether a company actively advertises with Google or not) earns a commission to the clicker. Who's going to police that? Anybody working with online search can see a myriad of opportunties to cheat PPA - good thing our mums raised us better than that.

I know that PPC is fraught with fraud, but like the old caveat goes, Buyer Beware. Not all affiliate programs are created equally, and higher bids do NOT mean less clickfraud. In fact, I see more opportunities for fraud (both by publishers and advertisers) with PPA. I think the PPC model works best - it's transparent, earns solid results and revenues, and is in fact easier to monitor against fraud. It also compliements what advertising is supposed to be - a message from the firm to the consumer.

Advertising is not just about earning a sale for everytime someone sees your ad. Advertising creates brand recognition, exposure, and more often than not lead to indirect sales. Paying for every click to their website costs advertisers more, but its part of the WHOLE buying process. PPA is like saying to the TV company "ok we're not going to pay you for airing our commericial, we'll just pay you everytime somebody buys our product and mentions your TV station".

[clasione]

I was just going over this with someone yesterday and your right - alarm bells should be ringing for every publisher..... Although it is only in beta testing right now, the feeling that it will become widely used feels inevitable....

The question is will only remain an option for adwords users or will become the standard.... That is what worries me...

A lot remains to be seen with this and it can definitely effect the entire industry as far as on site adverts, but something sure doesn't feel right with it... But it can go either way, real fast.

If it works well and Google rolls it out, will they loose publishers to competitors like Yahoo or will Yahoo follow suit?

Depending on the publisher and website which ads run, this could significantly decrease or possible increase revenue depending on how much better the payouts are on ads that convert.... If a Business to Business site is running PPA and their conversion ratios are very high, this could mean increased earnings for both the advertiser and the publisher, but if it goes the other way, there is sure to be a lot of unhappy publishers who will go elsewhere for content relevant advertising on there sites....

[bronzgevaar]

I don't think Google needs to worry about losing ground to anyone right now, except in areas where they're purposefully not developing. While I think CPA conversions will be significantly lower than CPC, I still think the big problem with CPA is a) who's going to define what a sale is and b) who is going to settle the inevitable disputes between publishers and advertisers? Clickfraud, so prevalent in CPC, is nothing compared to the potential in CPA.

Why lower conversion rates with CPA? Because the bids on CPA have to be much higher than on CPC for publishers to still make the same amount of money. Say advertising in Google gets 1 sale out of 100 clicks - in other words, advertisers get 10% conversion with Google. With a CPA model, publishers won't be paid for the 100 clicks, but only for the 10. Therefore, for publishers, the bids should be 10 x as high as they are now.

Will they be? Will advertisers paying 15$ for a click simply switch it up and pay 150$? Probably not. So, most publishers won't go for this model (if Google gives them a choice, which they surely will) and the ones that do will probably try and cheat it, leading to lower conversions and tons of clickfraud.