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Could Google Wallet end click fraud?

Rumors persist that Google will soon roll out a stored payment system

5:03 pm on Feb 23, 2006 (gmt 0)

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From Wired [wired.com]
A possible answer to the privacy worries may be something called Google Wallet. This new initiative, not yet unveiled as of early December, is believed to be a payment scheme that surfers would use, for example, when they bought something after clicking on a Google ad. In theory, at least, Google could process the payment to the advertiser without having to know anything about its costs, profit margins, or other sensitive data. Like Gross's cost-per-action, Google Wallet would be immune to click fraud - zombie machines could click away, and the system would simply ignore them.

I'm not sure how reliable this source is, but if true it may drastically change the future of online marketing.

Can anybody confirm that Google will place ads based upon a cost per acquisition model rather than CPC?

[edited by: mona at 6:45 pm (utc) on Feb. 23, 2006]
[edit reason] Changed link to Wired [/edit]

5:28 pm on Feb 23, 2006 (gmt 0)

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Read the article that blog post pointed to on Wired, and it had a great little quote:

Stoking advertisers' fears by claiming that the system is drowning in click fraud, these outfits nonetheless solicit clients with … keyword ads on Yahoo! and Google. Indeed, a recent Google search for "click fraud" turned up more than 30 companies.

LOL. Too true.

5:46 pm on Feb 23, 2006 (gmt 0)

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Wouldn't it be a natural thing for a click fraud prevention software business to market itself via PPC ... it has to show confidience somewhere?
7:09 pm on Feb 23, 2006 (gmt 0)

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Previous discussion here - Google plans Paypal-type payment service [webmasterworld.com]
8:02 pm on Feb 23, 2006 (gmt 0)

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I think you missed my point by changing the link. The original link stated that google might move towards a cost per acquisition model rather than a cost per click model to avoid click fraud in the future.

This is exactly what Snap is trying to do, but it looks like Google might beat them to it.

It also does not bode well for anyone working on a commission structure.

1:52 pm on Feb 24, 2006 (gmt 0)

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I didn't realise that there was a CPA model out there already. Does anybody have any idea is Snap is any good for a UK market or is it predominantly US?
1:52 pm on Mar 4, 2006 (gmt 0)

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In 2004 I did a research for a company, (I am not alloud not mention here, I hope you understand), concerning CPA based advertisements and it's cost efficientie and effectivenes. It turned out, that there are three main reasons why it doesn't work, and probably will never work, and why CPC always be more effective and efficient.

Conclusion one, customers in onlineshops, know for 89,67% (sig. 0.99) where to go. They don't click any adds or links (on other websites except than the online store) from the moment they go online untill the moment they purchase their product.
This means that there is roughly 10% of the online buyers left that clicks on links and adds before buying a product online.

The above tells us only something about the people who already buy products online. However, we also collected data that showed us that, from the people entering a website through an add, only 0.3% to 1.2% actually buys a product with a '*mode' of 0,35% and an average of 0,33% (sig. 0.99). This means that, whatever you are selling, it is not worth it. Any marketeer would tell you that if an adds conversion rate is only 0,33%, you probably shouldn't even bother thinking about it.

Out of google's perspective, I cannot say, only that I doubt that the revenue made from CPA will ever be more profitable than CPC. And like in any other industry, the internet shouldn't be treated any different. If google indeed is going to do what this article says they are planning to do; ie. google wallet, it only takes a minute for others to offer lower rates.

Do not forget that google is a company, which has stockholders. Stockholders like morals, but they like the other M word just a bit better.
If google, indeed wants to change its advertisement business (which is practicly what google is as a business), and they put the piracy/fraudelentclicks morals higher than the revenue. Really heroic, but in a year; no more google.

Above I mentioned that 90% of people that shops online, knows exactly where to go, and doesnt any click any adds or links, remember...? These are the people you want as a store, because they keep coming back. You want them.
The effective way (but I cannot fully back this up statisticly)to make them change their mind, so they will buy certain products (i.e. cds, dvds, games) from another website than the website they usually use; Is through conventional media (newspapers, TV, Radio, etc.)
Compare it to the grossary store, would you suddenly without any information from the media change your mind and try a different grossary store..? Prob not hè.

Anyways, why CPC and not CPA?

For an online store, it doesn't matter that much, they probaly pay less with CPA (depending on rates ofcourse). For now adds are for most online businesses really ineffective. However all those clicks, might give you some name branding.

For Google, they will probably be broke in less than 4 months.

The only thing I could think of is, that it will be a mixed system.

- Paul

* Mode = Most common value


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