Cost-Per-Action -- is this new?

how will it affect publisher's earnings

[londrum]

my earnings have taken a dive over the last month like a lot of people's, and its probably got something do with google rolling out this new caffeine thing. or maybe it's the new interest-based ads, who knows. could be a few different things.

but i was reading the AdWords forum to see what was going on, and there was a topic in there talking about a new 'cost-per-action' thing that advertisers can choose. and i was wondering what that involves.
presumably it means that publishers will only get paid if the clicker does a specific thing after clicking the ad, like visiting a checkout page.

that would obviously cause our recorded clicks to plummet, if google have started discounting genuine clicks that lead nowhere.

does anyone have any info about what 'cost-per-action' actually is, and whether that might be causing our CTR to drop?

[netmeg]

Well... for some time we advertisers have been able to bid on a cost per action basis rather than CPC. If I decide that a lead is worth $15, for example, then I tell AdWords Conversion Optimizer to optimize for that, and it does.

Works better for some campaigns than others. But it's nothing new, been around for a while.

What they did change just recently is that previously an advertiser could specify the maximum cost per action (or acquisition), but now we can specify the AVERAGE CPA we want to target instead.

Haven't gotten around to trying it yet myself.

As far as I know, the publishers still get paid for the clicks. It's just that if I specify $15 for a conversion, Google knows it is supposed to send me a conversion every $15 worth of advertising or so.

[Scurramunga]

Excuse my ignorance, but how is a conversion determined?

[netmeg]

That's whatever the advertiser determines is a conversion. It can be a sale, a signup, a lead, even a pageview.

AdWords gives you special code to put on your confirmation page, so that when a conversion occurs, that code will track it.

[edited by: netmeg at 12:32 am (utc) on May 13, 2010]

[farmboy]

CPA was availabe for publishers a while back - or at least a version of it was available.

It had potential, but the implementation was horrible and it died a deserved death.

Is this some sort of resurrection or something new altogether?

FarmBoy

[netmeg]

It's something different, but not something new. I think the Cost Per Acquisition is probably a more precise term.

[ken_b]

Does this affect Content Site Campaigns, or is it just on Search Campaigns?

.

[Scurramunga]

That's whatever the advertiser determines is a conversion. It can be a sale, a signup, a lead, even a pageview.

AdWords gives you special code to put on your confirmation page, so that when a conversion occurs, that code will track it.

With regards to conversions, If I'm not mistaken that determination is similar to that of the former pay per action referrals program (where the publisher also opted in and placed referrals code on the page). Except from what I gather on this thread it's now the advertiser who opts in, so I am guessing that clicks would still be paid for.

It would rely on the honesty of the advertiser to a large extent, I assume?

[chetan]

google rolling out this new caffeine thing

Google is rolling out the Coffin on Adsense publisher ;-)

[netmeg]

Somehow I don't think I'm explaining this right.

The Conversion Optimizing has nothing to do with the former quasi-affiliate program the AdWords used to run.

Advertisers have been able to define and track their conversions for years. Maybe even from the beginning, it's been so long I don't remember anymore.

The Conversion Optimizer works for both the Search and Content network. You tell G what the conversion is worth to you, and they will display your ads in the manner that will best net you conversions at or below that amount. You don't specify an actual amount per per click, G determines how much each click will cost based on a number of factors.

I'm pretty sure the publishers get paid per click on conversion optimized campaigns. I suppose it could affect the publishers if G decides that Site A sends traffic that's more likely to convert than Site B, and so pays for clicks accordingly. But this is nothing that smart advertiser isn't already doing for himself if he's paying attention. Google just automates it (and of course, has more data at its disposal)

Nothing is new here except that now advertisers can specify an average CPA that they would like to achieve rather than a maximum CPA. Presumably meaning some are higher, some are lower, but they all average out.

I don't think it has anything to do with relying on the honesty of the advertiser. The advertiser gets to define his conversion, and it's tracked by means of the tracking code on the final page of the conversion. You don't have to use AdWords Conversion Tracking if you don't want to (although I sure do) but I don't think you can run a Conversion Optimizer campaign unless you have tracking enabled.