I’m very glad this Pay Per Action (PPA) beta test is now available and it’s definitely a smart move by Google to fill in the gap of their advertiser base. It will be running on the US content network only initially with limited ad formats, but I’m sure that will expand and grow as more advertisers sign up and publishers request more formats.
The Problem With Current Content Targeting
Many advertisers turn off content targeting (I hate that it’s turned on by default when you create a campaign) because they get poor performance and high clicks costs. It makes it doubly hard when a new or inexperienced AdWords customer wants to try the content network because it very often requires a different strategy to make it successful and when the first taste of results is sour, it’s tough to lure them back in to try it again.
PPA will provide another advertising option for those AdWords clients who opted out due to poor returns and high costs. This will be on their financial terms and is much easier for them to justify and track.
Gaining New Advertisers
There are still many companies who do not and will not trust CPC advertising, or Google’s click fraud protection, due to the huge discrepancies in reported click fraud which runs anywhere from 2% to 20%, and especially when just a year ago Google was involved in a class action lawsuit where they agreed to pay $90M settlement.
Many have misconceived ideas and notions of how CPC advertising works and will not be swayed, regardless of the numbers presented to them. For these business owners, Pay Per Action is going to be much easier for them to digest and they’ll be much more willing to give it a try. Unfortunately, these are the type of people that will really need a helping hand, since they will typically be the most inexperienced at online marketing. The biggest incentives for them will be the lack of financial commitment and easy of applying their business model.
It’s A Double Sell
One of the other issues that PPA advertisers will face is the double sell. They will obviously have to craft ads in various formats with great marketing messages to appeal to the end consumer, but they will also need to ensure that they write appealing descriptions and have a website which appears to convert well enough to have publishers run their ads.
Bye Bye MFA
If this ends up replacing the current CPC model, it will virtually eliminate Made For AdSense (MFA) websites and click fraud because the payback is on the completion of an action (newsletter signup, lead, sale etc). This is a huge step forwards and while many part time webmasters will boo and hiss at this, it will appease the more important audience, the advertisers themselves, ie the source of the revenue. This could also have performance and storage implications for crawling and the indexing processes.
Unfortunately since a lot of Google’s revenue comes from content network CPC ads, they’re going to be extremely cautious at making this type of move.
The Poor Publisher
A lot of publishers will not like this model and will probably stay away from it. Their belief is that simply displaying the ads is providing value and they would like some compensation. While that’s a fair statement in itself, the MFA sites abuse this and tarnish the reputation of good, trustworthy publishers.
In a PPA or CPA model, the advertiser/vendor relationship is self regulating. If a publisher does not see good returns, they will simply swap out the ads.
Competing With Affiliate Networks
The PPA model, (a.k.a. Cost Per Acquisition (CPA)) is competing with the affiliate networks like Commission Junction, and they’re not going to like it at all. With Google’s offering, there’s no monthly service fee, which is much friendlier to the vendor. According to Andy Beal’s post where he questioned Rob Kniaz, product manager for Google’s advertising products, Kniaz did not feel that this was direct competition. Although they may not intend that to to be so, the similarities are striking.
Official Google Announcement: Pay-per-action beta test
SEORefugee: Overcoming Objections for Google’s Pay-Per-Action
SearchEngineLand: Google Launches Pay Per Action Ads
Barrons: Google Launches “Pay-Per-Action” Ad Beta