Google’s Pay-per-action Model Needs to Track Performance

March 20, 2007 |

The big news of the day seems to be Google’s Pay-per-action model with blogs citing the potential threat to the affiliate space this “new” advertising option presents (another from Search Engine Journal).

For years, we’ve considered Adsense itself a (if not THE) threat to affiliates as a model in which publishers are merely paid for sending traffic to an advertiser without the burden of delivering a sale. The real potential here is overlooked by classifying this as an Affiliate threat when this new form of advertising and payment is no more threatening than the Pay-per-click they first matured.

What’s new is that advertisers can now opt to pay per action; an attractive option to be sure as they’ve classified an action as any activity of value on site: A lead, the completion of a contact form, even a free trial subscription or download. You can advertise with your place in line (ads are still prioritized based on your relative value against other advertisers) set by what you are willing to pay for an acquisition, a much more attractive result than a click to your website.

“Pay-per-action ads complement your current campaigns by providing a new pricing model that extends your reach and allows you to pay only when a defined action is completed on your site.”

So what potential is being overlooked? Pay attention to this excerpt from Google:

You’ll create an ad and define the action that you want a user to perform when they visit your site, such as signing up for your newsletter or purchasing a product.
Then you’ll set the amount that you’re willing to pay when this action is completed.
Finally, you’ll install conversion tracking code on your website so that we can verify when an action has been completed.

“Install a conversion tracking code on your website” Certainly this is nothing new. Since the release of Panama, Yahoo! has a tag that can be added to track sales through search and platforms like 24/7 Real Media and Advertising.com have tracked sales to support ad models since their inception. This is however, a step in a new direction for the big gun, giving Google the complete picture of performance. How might this insight be used and what will it mean for the development of Adsense and bid algorithms?

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Tags: google, adsense, cpa

Comments

2 Comments so far

Anonymous on March 21, 20075:13 am
Interesting consideration but are you suggesting it is good or bad?
Paul on April 27, 20075:14 am
Both and neither
Are you ok with Google tracking activity on your site?

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