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Google AdSense Testing Cost Per Action

     
2:23 pm on Jun 19, 2006 (gmt 0)

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Anyone got the invite to test the new Adsense feature - Cost per action ads?
7:14 pm on June 21, 2006 (gmt 0)

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Google becomes an affiliate.

I would venture to guess that the best conversions come from the Google site itself. This should have been part of their click fraud settlement, it is likely the only sure way to solve that problem. CPC is a doomed model, just like CPM was in 2000.

It's nice to see Google adapt. Goodbye to those in the PPC affiliate game, it's been nice knowing ya. Google thanks you for the keyword lists.

CJ, don't let the door...

7:31 pm on June 21, 2006 (gmt 0)

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As an affiliate marketer, especially one who derives traffic from search, how comfortable would you be working with Google on a CPA basis?

Not at all. Affiliate marketing is about sales, AdSense is about syndicating ads on sites based on the keywords in them. Two completely different models.

To much focus on PPA/PPS will eventually destroy the Internet IMHO. Nobody will make any money from advertising as a publisher, companies will never want to pay anything for any display ad. You'll have Google, shopping sites and places to buy stuff on the Internet but no money to buy anything. (If you're a publisher)

7:34 pm on June 21, 2006 (gmt 0)

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CPM Doomed/Dead? Still how an awful lot of media buys are done online.
7:40 pm on June 21, 2006 (gmt 0)

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An affiliate relationship of this type has to be built on trust. An enormous number of MFA/arbitrage sites have sprung up around AdSense, and they're probably all rubbing their hands in anticipation of gaming the system in whole new ways. I sure don't trust them to act ethically.

Easily said, but not easily done. If the A in the PPA means a sale, they only way to game the system would be to buy stuff through fraudulent means. If somebody is that crooked, publishing a website would just be extra work for them.

I'd be happy to see the system move to PPA. I don't know whether or not we'd benefit or lose with Adsense, but it would tempt me back into using Adwords for the first time in years.

7:57 pm on June 21, 2006 (gmt 0)

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Tried CJ and others like them in the past in a number of subject areas and found extremely low 'reported' conversions. I'm very skeptical that sellers are not reporting all sells. Furthermore, what happens when the advertiser has a big, bold, telephone number on their site and strongly encourages the visitor to call-in their order? You can bet you're not getting credit for THAT sell even if the visitor tells them he's calling from seeing it on the website, and even if they DID report it how would they know WHICH publisher sent it? I think that was a major problem with our CJ experience.

OTOH, Adsense has a vested interest in every sale and MORE IMPORTANTLY the ability to control and fine tune which ads show where and how often unlike CJ. Thus, if Adsense tracks the conversions and avg return per clickthru for each advertiser from my particular page, and only displays ads for those that create the highest CPM for me based on CTR and conversion, sort of like they supposedly optimize with the regular ads, then there might be something to it. In this case it would quickly weed out those ads that simply don't convert for your site (or ANY site) or who tend to under-report sales since they would simply get fewer impressions. But watch out advertisers it's a two edged sword: no conversions reported = no future exposure. Thus Advertisers DO need to track which direct TELEPHONE sales result from online advertising and be willing to ADD those into the commissions they are willing to pay per registered online conversion, since they would not otherwise have had those sales without the online exposure. It would be most elegant if Adsense could handle it like they do now with the contextual ad option and, if you opt for it, they try a mix of all types of ads, and optimize selection based on what ads are producing the highest CPM at the time. I might actually give that a try if they get it working properly.

If done properly, it MAY actually succeed in penalizing the publishers who don't send converting clicks since they'll only get the non-CPA ads and reward the good publishers since the conversion ratio for those advertisers who opt for the conversion method will go up so they can afford to pay more to the fewer better converting publishers. Depending on how the advertisers take to it, it could mean a lot fewer ads for the poorly converting publishers. But there are also still a lot of advertisers who don't really have a way to register a conversion who will remain on the old system.

7:58 pm on June 21, 2006 (gmt 0)

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i floated this idea about a year ago, and got an unbelieveably negative result from other WW posters:

[webmasterworld.com...]

now, posters seem to be warming up to the idea.

8:02 pm on June 21, 2006 (gmt 0)

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Ha - you guys hear at WebmasterWorld have been talking about this for a couple days. It just hit the mainstream news and me and every other blogger is writing about it today - lots of Diggs about it too. I'll share a little of what I wrote this AM about it.

Google offers a little piece of enticement to Adsense publishers by saying: "Since this is a test and these CPA ads are not regular ad units, we are giving you more flexibility in saying things like “I recommend this product” or “Try JetBlue today” next to the CPA ad unit." However Google states reports will be sent weekly by email and pro affiliates will not go for this.

So it's only a test - I repeat THIS IS ONLY A TEST. But we all know Google plans to take over the world. (sarcasm) So it will be interesting to see if they really do jump into the affiliate network game with both feet.

I think it's a little EXTREME for David Jackson to short ValueClick stock and proclaim this move as the end of Commission Junction. However, this really could shake things up - we'll see.

Linda

8:15 pm on June 21, 2006 (gmt 0)

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>> CPM Doomed/Dead?

Dead? No. But declining.

2001 [clickz.com]

In the first half of 2000, straight CPM deals accounted for 43 percent of revenue, and by the same period in 2001, that number had grown to 50 percent. Hybrid deals accounted for 47 percent of dollars in the first half of 2000, and only 40 percent in 2001. Straight performance deals stayed the same, at 10 percent.

2004 [webpronews.com]

Pay-per-click advertising, which makes up most of Google's revenue, for example, led the online ad methods, followed display and classified ads.

Can't find numbers for CPA market share in 2006, but I'm guessing it grew.

8:18 pm on June 21, 2006 (gmt 0)

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Yeah, it could shake things up a bit, anything Google does shakes things up. But as I see it Google already has two strikes against it to working well within the affiliate community: non-transparency and lack of communication.

Those canned responses and "we can't tell you that" e-mails won't work in the affiliate world except among the clueless.

Let's see if it learns how to play well with others.

8:20 pm on June 21, 2006 (gmt 0)

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If Google implements it only for merchants using GBuy (if/when that launches), then it would be a lot harder for merchants to "shave" results downward.
8:28 pm on June 21, 2006 (gmt 0)

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Okay I can see the original email from Google in other forums, and for the beta at least you can CHOOSE what to promote and these ads are completely SEPARATE from conventional AdSense ads (as stated above).

In other words the risks I was worried about will not come to pass, and in fact webmasters will have more choice. I am mollified.

8:58 pm on June 21, 2006 (gmt 0)

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CPA huh? Time to move into Real Estate I think...
9:57 pm on June 21, 2006 (gmt 0)

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domain parkers are going to make a killing...
10:02 pm on June 21, 2006 (gmt 0)

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The only way this could be realistcally enforced is if it were to be integrated with the "Google Buy" system they are set to release. If that is something like Yahoo Stores, then they could track sales and credit the publisher upon action without having to worry about advertiser reliablility.

I don't think this is going to work though, particularly not if it is a forced model as opposed to being optional. I still see my advertising space as having value regardless of whether or not sales are directly made via clicks on my site. For branding purposes for example, if the advertisers can build a brand name via advertising space for free, then I'd just go with one of the other numerous advertising companies.

Also, how would people that see an ad and then call up to place an order be tracked? They wouldn't! I do that all the time because I hate ordering online, so I order via. telephone, and I know there's plenty of people out there that do the same.

10:16 pm on June 21, 2006 (gmt 0)

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I say we all meet in the middle with the CPM model. IMHO, its the easiest way to find a middle ground between advertiser and publisher.

If it's CPM based on a statistical projection of the audience, it's workable. Otherwise, it's just as fraud-prone as CPC. CPA is workable when there is a trust model in place between advertiser, publisher, and SE/ad network (and a robust means of enforcing trust breaches).

Personally, I believe that fixed fees are the least prone to click fraud, but people complain that they are paying for insufficient (non-fraudulent) traffic.

10:32 pm on June 21, 2006 (gmt 0)

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As a publisher, I will definitely try the CPA model, but be hesitant to replace an already successful program with one that is too dependent on the quality of the landing page, checkout system, pricing etc.

I guess "success" depends on who you ask. All those innocent people who got booted out of AdSense certainly don't think it's successful. They got burned by fraudsters who Google couldn't (or wouldn't) catch, and instead got booted from the program.

At least with CPA, if advertisers don't pay, it's obvious that this is happening and legal action can be taken directly against them. Whereas with CPC and CPM, the fraudsters can easily game the system while hiding their true identities, making it difficult to take legal action against them.

Perhaps scoring can be applied to advertisers based on their dutifulness in paying commissions. Thus both publisher and consumer can be aware of who are the most trusted vendors.

10:44 pm on June 21, 2006 (gmt 0)

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But as I see it Google already has two strikes against it to working well within the affiliate community: non-transparency and lack of communication.

This is a good call! Time will tell I guess, I have a strange feeling Google has something up it's sleeve here, you-never-know.

:)

10:44 pm on June 21, 2006 (gmt 0)

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All those innocent people who got booted out of AdSense certainly don't think it's successful.
Huh?

This is something to watch. Hopefully it will work better than adlinks, which made me feel like I was an MFA site during the two weeks I tried them.

10:52 pm on June 21, 2006 (gmt 0)

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I would suggest Google run their quality bot (increase your bid or improve quality) against the landing page of the advertisers. I have noticed to many 800 numbers staffed 24/7 in all of the hot spots of the landing pages on CPA operations.

[edited by: herb at 10:54 pm (utc) on June 21, 2006]

10:53 pm on June 21, 2006 (gmt 0)

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To much focus on PPA/PPS will eventually destroy the Internet IMHO. Nobody will make any money from advertising as a publisher, companies will never want to pay anything for any display ad. You'll have Google, shopping sites and places to buy stuff on the Internet but no money to buy anything. (If you're a publisher)

I imagine publishers whose sites drive a significant amount of sales will make money. Perhaps not enough to retire, but enough to cover costs of their sites. I've always been skeptical of the mindset I find in the publisher community that creating a site is a pathway to wealth. (I'm not singling you or anyone else out in particular, just making an observation about the people who seem to expect instant wealth despite having sites that have only been online for a short time and draw very little traffic, let alone sales.)

11:10 pm on June 21, 2006 (gmt 0)

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LinkShare & CJ will not be 'doomed' by Google in the slightest. CJ & LS have recognized brand names. Merchants must pay activation fees. Merchants have a vested intrest in remaining with their current network. In LinkShares case merchants are contractually obligated to stay.

CPA networks realized years ago their technology was not a competitive advantage. So they turned into marketing machines that now have loyal clients. All merchants have representatives to help build their program. Simply building a slightly better mousetrap is not going to win over their business.

Now if Google were to take their CPA merchants and arbitrage their offers against Google's clicks then that would be an interesting business, much like Fastlicks, that could make a ton of money for Google.

1:15 am on June 22, 2006 (gmt 0)

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Move over Commission Junction?

With $1 payouts...i don't thinks so ;)

Try $5 and above per action + more control for publishers + some sort of merchants policing system ensuring proper tracking + 90 day persistent cookies.

Only then we may have a better option to brag about. Otherwise, waste of time IMO.

1:47 am on June 22, 2006 (gmt 0)

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I'm torn by this being both a publisher & advertiser in roughly equal $ amounts.

I know how much work can be done to a store to increase conversions, and most small to medium stores have gaping holes in their conversion optimisation, so as a publisher I don't like this.

As an advertiser, I want to pay for the most qualified leads, and what better way to do it. I'm a bit too small to justify setting up my own affiliates program, but if I can do it via google, I'd sign up in a heart beat. I've tried a few ad networks and google has the lowest $/conversion for my niche, so this is great.

2:43 am on June 22, 2006 (gmt 0)

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I guess this really puts a clear divide between two different marketing tactics:

1. brand awareness
2. direct marketing

The reason I say this...I do some PPC marketing for my free community site. Clearly my conversions are high but money earned is low. Contrast this against subscription-oriented forums/communities and thre's no way I could afford the CPA budget they could - it would be night and day. So I guess CPA is out for me. I would have to focus on CPM and PPC.

3:38 am on June 22, 2006 (gmt 0)

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The only way CPA will work for publishers is if the advertiser's pages convert super well .. maybe this is why Google added "landing page" metrics to the quality score algo...

Google will probably reward advertisers more traffic based on how well their landing pages perform and convert.

Google would be betting its entire stock value on advertisers landing pages and offerings if they went to CPA ... not just that if landing pages dont convert that means no money to publishers and we will all be flocking like crazy to YPN etc.

3:49 am on June 22, 2006 (gmt 0)

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I bet this is going to be the "new" adwords CPA interface:

[tinyurl.com...]

.sctn. 2. SUMMARY OF THE INVENTION

[0018] The present invention helps advertisers to (1) select a landing page (or some other desired action in response to an ad selection by a user), (2) select or target appropriate Web pages (or "documents") to advertise on, and/or (3) create an ad creative that will be used to entice users to select their ad. The present invention may do so by using online information (such as advertiser Web pages in conjunction with products lists (which may have been derived from online information, but may be provided from an offline source), Web content, existing online ads, etc.). The present invention may also do so by using information from an electronic version of offline advertisement information.

4:11 am on June 22, 2006 (gmt 0)

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90 day persistent cookies

Now I like the sound of that! I've not looked into any of the players in the CPA space in any real detail. Is there anyone out there that offers such an extravagant cookie time these days (non porn) that Google would have to consider that? The most I've seen is that I believe the eBay affiliates cookies last for 7 days.

4:32 am on June 22, 2006 (gmt 0)

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it's just like offering me a hyundai when i already drive porsche. or, in terms of google, offering us publishers video ads who are only paid if someone 2-step-clicks on the play-button and then on the playing video when we're pleased with cpc text ads.

how should that all work out for us? why don't they reflect about their new products first before they introduce them to the masses? that way, everything newly introduced will be a non-starter further on.

you just can't turn the advertising market inside out, gain monopolistic market share with the revolutionary cpc idea and then introduce ancient accounting methods no single publisher will gain from. that's just not the way it works. we are too spoilt by cpc, we would never accept an accounting method that earns us but one penny less and makes us reliant on reported sales and landing page quality, that is advertiser-side things we have absolutely no influence on. advertisers may cheer considering ppa features with 100% safe guaranteed income and margins.
it's again shifting the risk distribution completely towards the publishers just like in the old days where earning money with content websites was simply not possible for most of us. a real regression.

i'm not responsible for advertisers who don't get their act together and screw up otherwise safe sales through their own incapability.
i will not trust people, who have a strong monetary incentive to not pay me correctly.
and in no way i want to do branding and sales promotion for free in my ad space.
we just deliver qualified traffic for which we are paid for. all other things are out of our control.

4:48 am on June 22, 2006 (gmt 0)

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you just can't turn the advertising market inside out, gain monopolistic market share with the revolutionary cpc idea and then introduce ancient accounting methods no single publisher will gain from. that's just not the way it works. we are too spoilt by cpc, we would never accept an accounting method that earns us but one penny less and makes us reliant on reported sales and landing page quality

So true! Good post man

5:03 am on June 22, 2006 (gmt 0)

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All of us are agreeing at least that "the publisher" will end up making less money... and Google is just an enormous publisher publishing our content/ads.

Basically, if it's not a more profitable move for publishers, then Google will surely turn it down.

It would be a tough task to convince EVERY business online to opt for CPA rather than ppc... if people wanted to sell on ebay and have a percentage taken out of their pay then they would... and many do... however it's not IMHO a profitable business structure for a large scale operation.

And I doubt that even ebay sellers would be that eager to sign up... why would they want to give power to another enormous corporation who's going to inevitibly jack up their cut of the take (just like ebay did mid last year) and screw over the sellers without even giving them the reacharound?

This will go no further than beta in my opinion.

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