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Google Introduces Pay Per Action beta
Brett_Tabke




msg:3287351
 4:25 pm on Mar 20, 2007 (gmt 0)

Google AdWords Press Release [adwords.blogspot.com]

Pay-per-action advertising is a new pricing model that allows you to pay only for completed actions that you define, such as a lead, a sale, or a pageview, after a user has clicked on your ad on a publisher's site. You'll define an action, set up conversion tracking, and create ads that publishers in the Google content network can then choose to place in new ad units on their site. Let's run through the details:

Is it me, or does that sound like an affiliate program model?

 

adfree




msg:3287661
 8:39 pm on Mar 20, 2007 (gmt 0)

EFV ...and cj pubs can pick and chose to hand-target their ads. Some pubs like (need) that. Most of those would claim to be successful and happy.

mojomike




msg:3287664
 8:42 pm on Mar 20, 2007 (gmt 0)

This program just might be what I need for a client of mine!

Currently they are buying high quality very niche leads for over 6.50 to 8.50 per lead ( yep six dollar and fifty cents ). if I could get them into this program, I might be able to reduce their cost.

currently they are buying 1250 leads ( +- 10% ) per day and I have an average of 16 days a month that they make purchases. so any cost reductions can be a big score for my client.

also for those that are trying to figure our whom this product is good for, I have a great example. Say you have a site about buying stocks without a broker and dividend reinvestment, you could easily create a page that a company would buy the lead that desires to have this type of investor. ( side note : drip investor are real long term investors and rarely sell out, so it's to the advantage of the company to have a ton of them )

maximillianos




msg:3287670
 8:49 pm on Mar 20, 2007 (gmt 0)

There will always be click fraud. This just shifts the fraud from the publisher's side to the advertisers side... (ie - advertisers not reporting payouts/sales for clicks)

MikeNoLastName




msg:3287695
 9:13 pm on Mar 20, 2007 (gmt 0)

Sounds like a whole lot more work for Publishers: reading about affs, selecting, monitoring earnings, switching, monitoring again. Used to do it with CJ and others, and hated it. We barely have time now to produce new and update old content! I'd rather have G do the optimizing, even if they DO appear to be wrong a lot of the time. Not sure I could do better in the long run.

simey




msg:3287703
 9:19 pm on Mar 20, 2007 (gmt 0)

There will always be click fraud. This just shifts the fraud from the publisher's side to the advertisers side... (ie - advertisers not reporting payouts/sales for clicks)

Only difference, one kind of click fraud puts money into googles pocket, the other kind takes it out.)

Erku




msg:3287711
 9:23 pm on Mar 20, 2007 (gmt 0)

I think this may be great and fair to both publishers and advertisers.

ADVERTISERS don't need to opt out of the content network, since they will be paid CPA.

PUBLISHER will benefit because if they have been taking care of building a good content now they will not be hurt by smart pricing and will get paid more.

Let's wait and see.

craigo




msg:3287747
 9:53 pm on Mar 20, 2007 (gmt 0)

I'm a newbie here so please excuse me if this question is "out of line" or if it has already been addressed elsewhere. Is anybody concerned about Google's ability to track those in this new program?

Wouldn't joining this be admitting that you were an ecommerce site and define you as an ecommerce site too? This along with an Adwords account seems like it could be one more nail in your coffin if ecommerce site are dismissed or categorized as ecommerce only sites at a later date.

I guess I'm a bit paranoid about Google being big brother. They seem to be obtaining data from an awful large number of areas. Separating websites into shopping v.s. content only sites seems like a reasonable premis from where I sit - at least down the road a bit.

Wouldn't joining such a program just give Google one more piece of the puzzle and a way to later define you and segregate you as ecommerce or a content only site?

Please advise

trinorthlighting




msg:3287782
 10:27 pm on Mar 20, 2007 (gmt 0)

I like this, regardless of chargebacks and returns (Which are 1/4 of a percent with us) I would support this. Its a lot better than having to worry about click fraud.

ccam96




msg:3287787
 10:34 pm on Mar 20, 2007 (gmt 0)

Please excuse my venting about this...

So I guess this marks the beginning of the end of CJ and Linkshare as well as all of the pure PPC search marketing affiliates. Google is essentially taking this piece of the pie for themselves. This is what the "quality score" was all about in the first place wasn't it? Just a way to clear out the competition for Google to step in and take over with first CPA for the content network and then CPA for search. They are the "Wal Mart" of the online world.

OK, venting over..

I'm sure there's opportunity here that I haven't realized yet, so it may actually be good for affiliates who can adapt.

europeforvisitors




msg:3287790
 10:37 pm on Mar 20, 2007 (gmt 0)

Wouldn't joining this be admitting that you were an ecommerce site and define you as an ecommerce site too?

No, because the program isn't limited to e-commerce sites.

potentialgeek




msg:3287807
 10:48 pm on Mar 20, 2007 (gmt 0)

It was inevitable that Google would look into the value of this type of advertising. Whether or not it becomes successful is another matter. It looks like an attempt to woo back folks who left the Content Network. Not sure about: a) the self-defining success; b) how pricing is determined; c) and how Google plans to monitor it. Could have even more potential for fraud than vanilla click fraud.

Personally I'd be interested in a hybrid model, i.e., x cents per click and y cents per lead/sale/conversion. A lot of baseball players, for example, have a fixed salary with performance clauses. Why not use the same principle online?

p/g

powerstar




msg:3287930
 1:51 am on Mar 21, 2007 (gmt 0)

Its a lot better than having to worry about click fraud.

CPA will be better for fraud control. On CJ you can always reverse the transaction after the fact while you can not do it with clicks plus you can report the affiliate and he can be removed from the network.

oodlum




msg:3287938
 2:01 am on Mar 21, 2007 (gmt 0)

I think simey has a point. With affiliate programs the publisher gets his commission per sale and that's that. It's the advertiser that pays the affiliate network (CJ etc). Now publishers have the fantastic opportunity to split their commission (50/50? 20/80? Who knows?) with Google.

Gee, where do I sign?

I guess it will be a lot less work for the publisher, as Google will calculate the most profitable ads, but at what cost?

blaze




msg:3287969
 2:39 am on Mar 21, 2007 (gmt 0)

hey europe, I'm sure tools to do side by side comparison / CPA versus CPM versus CPC will come in time (though CPC might vanish after awhile).

It only makes sense. CPM is a useful tool for advertisers in many ways from a branding point of view. CPA makes obvious sense.

Google's huge value proposition is, let's face it, this huge gosh darn database they have on IP addresess and there interestes.

They hit you every which way - gmail, adsense, you tube, google.com .. They have profiled every internet user down to a T. Do you watch videos on how to play a guitar? Then maybe guitar ads are just the thing for you, even if you're on a website about the waterways of venice.

Google's value proposition is their ability to server the right ad at the right time. It only makes sense that we let them do that rather than do it ourselves.

CPA will also allow us to embed ads anywhere anytime. Google doesn't really care where and how we embed them. It's meaningless to them.

Which means ... you guessed it .. software. We can start writing software and putting in ads. This, of course, is the downfall of Microsoft.

This was always on the radar. We always new this was going to happen eventually, and now it has. I'd say it's a brave new world out there, but it's been a brave new world for quite some time now..

martingale




msg:3287971
 2:46 am on Mar 21, 2007 (gmt 0)

I don't see how this can be properly controlled.

Here's a scenario: User clicks on my ad while surfing at work. Notes down the URL. Returns later in the evening from home and makes a purchase. That is a successful outcome, but the publisher who sent me this good lead is not likely to get paid.

I try and track successful outcomes on my own right now. I guess I only really trace back 30-40% of the PPC wins to the ad that the visitor arrived from. Others I miss because of things like the above, or people who have cookies disabled, or any number of things. But identifying 30-40% gives me good enough statistics to work out which ads are, overall, performing well and which aren't.

In aggregate that's fine, but how is this fair to individual adsense publishers? In the long-tail land of content sites a particular publisher may only send me a couple of users. Perhaps both convert for me, but, unluckily for the publisher, I fail to track either well enough to determine that they are "wins". I will be getting "free" clicks as a result sometime, and presumably that means I'll have to bid a lot more for the ones that I do track successfully. In aggregate I'll pay the right amount, so in aggregate it'll work out for publishers overall too--but I suspect that there will be so much randomness for any individual publisher that they'll see their revenue numbers go all over the map.

As a result, individual publishers will be unable to tell which of their pages perform well for us advertisers, and they won't work as hard to create good pages. Currently publishers can easily tell which of their pages pay-off because the payments go 100% directly to the publisher who sent the click. It's then up to me to shut down ads that return junk traffic, which, eventually, signals to the publisher which pages are good and which are bad.

By introducing a lot of noise in the process I think publishers are going to have a harder time generating content that converts, which ultimately is bad for the advertiser.

I'm also wondering if advertisers can game the system somehow. I can't think of a way, really, but perhaps you could intentionally misrepresent the number of successes or the degree of success so as to pay less.

It's an interesting idea and I'll probably give it a kick if I get a chance. I'm also wondering though... so what happens if I report successes more aggressively than my competitor? What if two sites have the same number of successful outcomes, but one reports only 1/10th of the successes. Does google work out to charge the under-reporter 10x as much, overall? I guess they try and do that.

The ideal strategy is likely the one that returns the least "noise" to publishers, meaning, if a lead in any waylooks good you should return a yes, if you can, to deliver a more consistent feedback stream to publishers so that they can optimize their content, or so that google can optimize the algorithm.

Keniki




msg:3288005
 4:06 am on Mar 21, 2007 (gmt 0)

I think as already stated google content network has been destroyed by clickfraud and everyone's turning there back to it. I actually by mistake listed a keyword on content network and got hit over 2000 times per hour. Normally I'd get about 16 clicks a week. Google systems picked up the fraud on this occassion and wasn't charged. But after that my coinfidence in google third party advertisers was shot.

Keniki

SEOVisits




msg:3288009
 4:11 am on Mar 21, 2007 (gmt 0)

i have been in this program for a month of so & i haven't seen any actions at all. anyone else seen activity from this new system?

karamkshetra




msg:3288012
 4:25 am on Mar 21, 2007 (gmt 0)

It actually sounds interesting and I will be looking forward for the updates, as I don't have clients who will be willing to try on this.
;)

Green_Grass




msg:3288021
 4:53 am on Mar 21, 2007 (gmt 0)

I cannot understnd how this will be bad for MFA's. This is a boon for them. They will be ecstatic!

They will get traffic which will be so disgusted with the 'Sign up' requirement ( Defined lead )on the MFA landing page, so they will CLICK the adSense ads to get out. Wow! Free TRAFFIC for MFA's.

$$$$$ for MFA 's ... NOTHING for PUBLISHERS... :-(

This could really HURT publishers.

Brett_Tabke




msg:3288038
 5:14 am on Mar 21, 2007 (gmt 0)

Find me the thread from a year ago, when affiliates thought google had targetted them for sandboxing/pr0'ing...etc

skibum




msg:3288064
 6:38 am on Mar 21, 2007 (gmt 0)

IMHO, that's pretty farfetched. The vast majority of CJ's affiliates earn very little for themselves or for CJ merchants. In other words, the CJ network is a lot like the AdSense network, the main difference being that CJ advertisers get a lot of free branding from affiliate ads that don't perform.

For some sites/affiliates yes, but the successful ones won't consider switching to this program. It sounds like CJ's ill-fated LMI that was resoundingly rejected by affiliates.

If you have a content site and you just want to serve ads and hope that somebody buys, this is the program for you. If you are good at selling stuff, this is not going to be the program for you.

MsHuggys




msg:3288083
 7:13 am on Mar 21, 2007 (gmt 0)

This is where tightly defining the channels can pinpoint who is taking you to the cleaners, and who is performing. It is time to double those channels to 400 so the publishers can defend against an increasing number of advertisers who will squat on a site taking up space and giving nothing to the publisher.

It is not my fault:

A. Their site is a wreck, virtually impossible to find anything
B. Their shopping cart system was designed by a three year old child
C. Their customer support team was cultivated from 12th grade afternoon detention
D. Their products are overpriced
E. Product descriptions are overly inadequate
F. Their products are worthless
G. Their website fine print conjures up images of a dark crack house and the distinct impression the visitor will catch something that won't wipe off.

So, why should I give them space on my site, where they squat, pay me nothing, while they try to propell a 'brand' that shouldn't be on the web to begin with?

Take for example company A. Company A has an affiliate program with a major third party. They are a major company, with a fine product line. Upon arriving at their website, I am very impressed, Until I begin to add things to my cart, which will total over $360 by the time I am done.

This process has taken me an hour, though I am short on time, I love the product, I endure a website that goes to "the page can not be displayed" using my lightening fast internet connection, at a painfullly slow pace, more than a dozen times. Finally, I quit. I abandon my cart, never to return.

I do not call customer support. They have wasted enough of my time with their joke of a shopping cart system. I have wasted an hour. Later, they snail me, and ask if they can help me. Paper spam. Lovely. I don't think so. I shop online. Period. Take your paper goods and stick them in your own shredder. My local landfill has enough.

This company does exist, I am (now past tense) an affiliate of theirs, have been for many years. Only recently have I decided to visit their site and attempt to order from them. It is no wonder I have never made a cent from them over the years. They can't close a deal online, they close it via snail mail, and I don't get credit. Or like me, people refuse to go to that much trouble to order, with so many really savy ecommerce sites to choose from.

HOWEVER, they are also an Adsense advertiser now, and I have made a bundle off my visitors clicking on their ad in recent months. This is the way publishers need to be compensated, cpc.

They take up my space, skirt away my visitors, and should pay me for the click. Because almost certainly, they will muff up the transaction once they get to the advertiser's site and I will never make a cent on ppa. This comprises the mother load of those who will (have always) love(d) ppa.

Do I feel bad that I send my visitors to their site to browse, knowing fully well there will be no sale? No. I am doing a public service by letting the world know the company has no business being on the web to begin with, and driving them off the web, just asap. This will leave all those really savy ecommerce companies in the cpc pool, who can take that click, and make a sale on a great product, with great customer service.

This is my experience with ppa in the past seven, going on eight years. Many of my zero performance ppa partners are now Adsense partners. Finally, I am making some money. Of the over 1,500 affilate programs I have joined over the years, less than one dozen ever earned me a cent.

I put red widget ads on red widget pages, with search engines sending me traffic comprised of red widget lovers, big widget ads on big widget pages, upside-down widgets on my upside-down widget pages... a perfect scenario . I had the targeted traffic, they had the target product. But, because of incompetence on their end, all I really had was pretty site decorations.

PPA? *snicker* I think not. I will leave them for the newbie webmasters with the twinkle in their eye... such as I had way back when Alta Vista was king.

piatkow




msg:3288174
 10:10 am on Mar 21, 2007 (gmt 0)

As a publisher I vet affiliates carefully and give preference to companies I have purchased from myself. Carefully chosen ads give a much higher CTR than adsense although by the time conversions are taken into account the income is only marginally higher.

simey




msg:3288180
 10:14 am on Mar 21, 2007 (gmt 0)

It sounds like CJ's ill-fated LMI that was resoundingly rejected by affiliates.

exactly, and from what I saw on the adwords blog, these links are going to be affiliate unfriendly (for me at least) javascript like the LMI links were supposed to be.

RhinoFish




msg:3288342
 1:31 pm on Mar 21, 2007 (gmt 0)

adsense publishers being paid on a cpa basis will now carry the risks of returns (legit and otherwise), merchant/advertiser conversion efficiency (!), cookie duration, consumers' cookie settings, cookie washers/cleaners, consumers' javascript settings, click-at-work-buy-at-home scenario, advertiser funding issues (you get paid for sales for 30 days, what if advertiser quits on day 2, not to mention you are now a 30-day loan for advertisers) and more.

many adsense publishers have tried affiliate selling and saw how credit for conversions can be stolen by parties like ebates and other "loyaltyware", by adware/spyware, by others who manipulate cookies by loading 1x1 pixels that set a conversion cookie and much more. in the cpc environment, these risks are on the shoulders of the advertiser, not the publisher. in a ppa environ, the publisher now has the majority of this risk. and if you're thinking that action based payments will cure click fraud, which party are you referring to, who now gets "protected"? the advertiser or the publisher? the advertiser only pays for actions, their risks go way down. but risk doesn't just disappear, it gets shifted. in addition to the obvious tracking and payment issues I mentioned above, as a publisher, do you think nefarious commission thieves will sit by knowing that a conversion click registered in millions of G cookies awaits their trickery?

i don't think the ppa is worse or better than the ppc model in general, but there are two glaring issues publishers need to consider - risk and volatility. risks are clearly shifted to the publisher in this model, and because payments for an action click will be ~20-50 times higher than a ppc click, the revenue stream isn't nearly as smooth (think about how many actions you'll need to test things properly in a ppa environment versus a ppc setting, and the 30 day lag time you'll need to account for in analysis as well).

~20-50 times higher makes a VERY attractive target for fraud!

~~~~~~
Q: 20-50 times higher? rhinofish, you're nuts!
A: if a merchant pays $1.00/click for 100 clicks, they spend $100 in ad spend for 100 clicks/visitors. If they convert at 3%, they get 3 sales. If each sale generates $50 profit, they'd have $150 in total profits before ad costs. After ad costs, they'd have: (3 x $50 profit) - $100 ad spend = $50 overall profit. If they pay, ppa style, for sales actions only, what would they be willing to pay to achieve the same profit/spend in the ppa scenario? They were willing to spend $100 to get $150... if they offered $33 / action, they would still spend $100 to get $150 - that's 33 times higher than the $1/click. In the ppa model, they'd have much less risk than before (the publisher holds the majority of risks), so they might decide to push even harder - perhaps $45-$50 an action, knowing that cookies, returns and all the other pitfalls in their previous ppc numbers were risks that are now shifted to the publisher...

paulj




msg:3288395
 2:26 pm on Mar 21, 2007 (gmt 0)

dohh.. here comes the complexity and unknowns. What happens if the purchase is fraud? What happens if they return the merchandise? what happens if there are chargebacks? I thought CPA/PPA or whatever they call it these days was dying a long death because of these hot points.

I expect Google to tie their CPA program into Google Checkout at some point. This will give them more control over potential Fraud on the Advertisers side. And it will promote the usage of Google Checkout with more sophisticated ecommerce players who have resisted adding extra elements of possible confusion to their optimized check out process. I doubt offering an incentive on the Adwords program is enough to get most of the big players to tie Google Checkout into their carts.

I personally wouldn't be surprised that, if this beta proves fruitful, Google supplies some sort of Form toolset to be inserted into pages for CPA's tied to leads, etc. That way they keep a tighter reign on the process A to Z.

P

SAHover




msg:3288405
 2:32 pm on Mar 21, 2007 (gmt 0)

I've had content sites (running adsense) and affiliate sales sites (CJ, other networks, indies) for several years. A couple of comments:

1) My content sites don't generate sales. Visitors are there for the content. They are not ready to buy, they are not even thinking of buying. There is nothing in PPA for me on those sites.

2) My affiliate sites have been nerfed by Google for years. Can they continue to sandbox aff sites when the aff networks are their direct competitors? How does Goog justify that? I'm sure they won't bother to do so.

3) My sales sites generate commissions for me, and me alone. Why in the world would I split my commish with Goog? Will they send me the traffic if I do so?

4) Amazon is already trying contextual PPA with their Omakase ads. I've seen poor results from this on my content sites.

As a publisher, I see nothing in this for me.

trinorthlighting




msg:3288468
 3:13 pm on Mar 21, 2007 (gmt 0)

Regardless of all the bugs, I can see why google is leaning this way and I think publishers would like it.

We have quite a few eccomerce sites where average sales are between $1000-$2000. We would be willing to pay out 5%. So that means google and the publishers would split $50-$100 per transaction. Since the sites have about 10 transactions like that a day, thats a total of $500-$1000 a day.

Publishers would love 1/2 of that pie. Imagine if you were a publisher and getting between $250-$500 a day for sending us converting traffic......

Lets see, that means as a publisher you could make $91,250-$182,000 per year just from our site. Google would make the same.

Currently, that site spends about $12,000 in adsense ads a year.

See the difference?

Regardless of some bugs, google adwords has a great conversion tracking system. Even if they miss 10% of the transactions, would the publishers and google really care?

Currently $12,000 total for adwords
New advertising $364,000 - 10% = $327,600 in pay per action

We do not spend more than $12,000 a year in adwords currently, because there are very few publishers who write articles about our products. Limited adspasce! If there was a huge incentive like this, one or two publishers might create sites that would target our products and send us traffic that we miss in the natural serps.

drall




msg:3288557
 4:16 pm on Mar 21, 2007 (gmt 0)

We are so excited about this on the publisher side, words cannot describe. Publishers that actually have converting users are going to be very, very happy with this.

MFA's Scrapers and the rest of the filth that has plaqued the adsense system for years are going to be toast. Real publishers like us with high quality, high converting traffic will finally see the true rewards of our labor.

Accordingly so will advertisers who only have to pay per transaction, this will lead to higher payouts for publishers as the advertiser can now focus his/her ad budget to only publishers that are converting with no risk.

This is just a pure win/win for both sides.

the_el_man




msg:3288571
 4:23 pm on Mar 21, 2007 (gmt 0)

Whats the point in a company advertising on Adwords if they can do this? I'd happily pay 5 for a sale through this than 10p per click everytime!

europeforvisitors




msg:3288589
 4:39 pm on Mar 21, 2007 (gmt 0)

1)My content sites don't generate sales. Visitors are there for the content. They are not ready to buy, they are not even thinking of buying. There is nothing in PPA for me on those sites.

Depends on the type of content. On an information/content site where users are researching how to spend their money (a travel-planning site, for example) affiliate commissions can generate far higher earnings for publishers--and far more revenue for advertisers--than AdSense CPC ads do.

2)My affiliate sites have been nerfed by Google for years. Can they continue to sandbox aff sites when the aff networks are their direct competitors? How does Goog justify that?

I remember GoogleGuy saying a few times that it's all about the "value add." Also, do you remember when a Dutch SEO blogger leaked a Google "Spam Recognition Guide for Raters" a year or two ago? That document referred to "thin affiliate doorways" that provided "little or no value-added content or service to the user." The document went on to say that a site had the right to try to earn income, and that Google was simply trying to identify sites that did "nothing but act as commission-earning middlemen."

On the Google Search side, the message should be clear: Affiliate links are fine, but affiliate sites are regarded with skepticism.

An AdSense CPA program is likely to result in a flood of "AdSense thin affiliate sites," just as the AdSense CPC program led to a flood of worthless keyword-driven made-for-AdSense sites. This could limit the program's appeal for advertisers who aren't in the e-commerce business, since advertisers who are paying for leads (as opposed to trackable online sales) may encounter the same traffic-quality issues that they do with CPC ads.

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