RhinoFish - 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!

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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...