Pay-Per-Action (beta):
Pay-Per-Action (beta):
http://services.google.com/payperaction/

I think it's 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".

Another thought just struck me on conversions.

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.

Hey, as long as that doesn't lead to the diminution in advertisers' CPM and CPC campaigns, I don't care.

However, I avoid CPA ads - they do not make me any money, period. Plus, I find this argument of yours:

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".

very compelling.

Originally Posted by SearchAnyway

Another thought just struck me on conversions.

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.

I have to disagree.

Advertisers are going to decide what the action is. Either singing up for something or making a purchase. I don't see how this is so much different than many affiliate programs out there. And if I read the message I got from them correctly publishers get to choose which PPA to run so I don't see how they will be significantly lower than PPC if you get to tailor what you display to suit your niche. The more targeted the ads are to your audience the better the chances are they will be interested in them.

I think PPA makes sense too. It will definitely help fight click fraud since a click won't be the payout. It would make it harder for MFA sites to profit, which is a good thing.

Advertisers should have every right to decide what the action is and what they'd be willing to pay for that action. I think publishers will be able to pick and choose which advertisers they promote so they'll be able to pick the ones they can ultimately send converting traffic to.

I think it changes the system, but it's not necessarily something bad. It's not quite affiliate, but it's closer to it.

I don't think I will be using PPA at all. I will stay with PPC, and if they don't give you a choice I will leave the program. plain and simple.

Originally Posted by domain name SSR

I don't think I will be using PPA at all. I will stay with PPC, and if they don't give you a choice I will leave the program. plain and simple.

Yap... I agree... Stay with PPC will be fine for me...

PPA conversions are going to be NOMINALLY lower than PPC conversions, though a PPA conversion RATE will probably be higher. Think about it: in PPC, let's say 10 out of 100 clicks out of 1000 searches results in a sale, thus giving that PPC a conversion rate of 10%, a metric that is extremely useful in factoring the usefullness of the ad and the brand awareness of the company itself. More importantly, the publisher is paid for the 100 clicks, and while he might care about conversions, he's probably way more interested in CTR. In PPA, those 100 clicks and 1000 searches are completely useless; only the 10 sales are counted. Who cares if CTR is 10% or 1%? So where does conversion for PPA factor in? That'll be defined by the ad server, leaving the publisher in the cold.

So in PPC, our publisher is paid for 100 clicks. What is the PPA publisher paid for? That's right, the 10 sales. Now for the PPA publisher to make money, the bids on PPA must be 10x higher than PPC. Right? So how are the bids going to get that high? By fudging the data on PPA conversions and making advertisers believe that PPA is more cost-effective than PPC. Which it purely isn't.

So advertisers are going to pay more for the 'action'.
Publishers are going to be paid less for a click, and will probably be paid less for the 'action' in the long run too.

Who's capitalizing on all this turmoil? I'll give you a hint, it rhymes with "oogle".

And as for clickfraud, let's look at this way. If people can find a way to cheat on 5$ a click, they'll for sure find a way to cheat on 50$ an action.

You have to look at PPA from the advertisers point of view. Advertisers are getting more and more tired of paying for clicks that aren't real. I think if Google doesn't do anything they'd be losing advertisers, which also means publishers lose advertisers too.

People might be able to cheat if the action is signing up for a newsletter, but they're not going to cheat if the action means buying something.

I can't say how this will work for publishers, but the PPA does seem to move in the direction of affiliate marketing and there are probably more people making good money through affiliate programs than through AdSense. I think publishers will have to adjust. The goal will be to create a lead for a site instead of a click. That also has the potential to reduce the MFA sites that exist only for the ad. Sites will need to offer content to pre-sell people.

I think Google is mainly responding to what advertisers want. They are entitled to make money though. After all no one is advertising or publishing without them. Google isn't exactly perfect and they've moved away from that do no evil motto, but that doesn't mean everything they do is designed to rip everyone off.