Google Moves Beyond Pay-Per-Click Ads

Posted by: Rob Hof on March 20, 2007

Google just announced that it’s testing what it call Pay-Per-Action ads. Basically, advertisers will pay not for every click, as they do now, but only when someone buys something, fills out a form, or takes some other action (besides clicking).

On the surface, it looks like the Holy Grail for advertisers, some of whom wonder why they’re paying for clicks that may produce no revenue, or may even be fraudulent. But it’s not a replacement for pay-per-click ads. Andy Beal at Marketing Pilgrim thinks it’s mainly a shot at affiliate networks such as Amazon.com’s Affiliates, which are Web sites that get a cut of revenue when people they send to Amazon buy something. Jeremy Liew at Lightspeed Venture Partners think it also will do a number on lead generation firms such as LowerMyBills.com and LendingTree. Mike Arrington at TechCrunch has a good summary.

Still, there’s a good reason cost-per-click has been so successful. It’s kind of the mama bear of online advertising. Theoretically, advertisers would like to pay only when someone actually buys something, provides information about himself to provide a sales lead, and the like. But Web sites don’t necessarily want to run only cost-per-action ads because advertisers can tend to be lazy about creating good ads and good landing pages when they know they only pay for an action, not every click, says Anil Kamath, CTO at Efficient Frontier. Pay-per-click provides the best balance of benefits for advertisers and Web publishers, he believes.

So don’t expect cost-per-action to supplant cost-per-click ads, as some companies like Snap.com hope. But in a way that startups such as Turn have not yet managed to do, Google’s test may usher in the next step in the evolution of online advertising.

Reader Comments

BlaisePascal

March 21, 2007 7:28 PM

pay per action is not a new evolution. This has been a very important selling point of Advertising.com.

Harvey Lawton

April 18, 2007 2:56 PM

Even if you do have the best ads this can still be the case...

Pay Per Click is a big loser for many large ticket items like we sell.

We sell medical mobility products. Most of the people visiting our site are using it for a catalog never intending to buy.

I think there is a lot of waste and fraud with pay per click for many products and services on the web affecting a large percentage of companies.

Google and Yahoo are aware of this and they have the data and have not released this data to the customers.

Do you think Google/Yahoo is going to admit that a large percentage of poeple doing PPC are wasting their time and money? NO WAY!

I think people are figuring this out now in a big way. That’s why Pay Per Action is being offered by Google.

Google/Yahoo know the secret is getting out now. If people knew what Google and Yahoo know, they would not even try PPC for many products people are trying to sell on the web.

The word is getting out on this and will soon shock the PPC biz and the big search engines. Pay Per Sale will save Google and Yahoo and others will follow.

It will take a while but the pain for the publishers and Google/Yahoo will be worth it.

The big secret is now being exposed and will save many of the advertisers and Google/Yahoo.

Thank God!

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Bloomberg Businessweek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, and Douglas MacMillan, dig behind the headlines to analyze what’s really happening throughout the world of technology. Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.

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