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Google Introduces Pay Per Action beta

     
4:25 pm on Mar 20, 2007 (gmt 0)

WebmasterWorld Administrator brett_tabke is a WebmasterWorld Top Contributor of All Time 10+ Year Member Top Contributors Of The Month Best Post Of The Month



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?

4:36 pm on Mar 20, 2007 (gmt 0)

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I dunno. I only have one client for whom I think something like this might work, and I requested to be included in the beta for him. It's a totally new thing for us, but I'm willing to give it a try.
4:42 pm on Mar 20, 2007 (gmt 0)

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

Definitely sounds like an affiliate model. Especially if Adsensers are allowed to actually choose the PPA ads.

4:56 pm on Mar 20, 2007 (gmt 0)

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To all ye AdSense publishers whose traffic has stunketh up the bazaar, this is the bell tolling for ye; your business' days on this earth are numbered. But to those of you who have good traffic, ye shall soon bear the fruits of thy labor, verily, verily I say unto you.

-Shorebreak

5:05 pm on Mar 20, 2007 (gmt 0)



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

Affiliate programs are one incarnation--a subset--of the CPA (cost-per-action) advertising model.

In Google's version of CPA, publishers aren't affiliates of the advertisers; they're simply being paid for whatever the advertiser deems a conversion (e.g., transactions, leads, or even time on site).

The idea is interesting, and it could be attractive to publishers who (a) know from experience that CPA works well for them, and (b) aren't leery of the potential for fraud by unfamiliar and unproven CPA advertisers.

[edited by: europeforvisitors at 5:09 pm (utc) on Mar. 20, 2007]

5:06 pm on Mar 20, 2007 (gmt 0)

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From the Beta FAQ:
In which locations is the referrals beta test available?

For the time being, the referrals beta test is currently available only to English-speaking publishers located in the United States. We hope to open the test up to other locations and languages soon.

Only for US publishers, apparently :(

5:13 pm on Mar 20, 2007 (gmt 0)

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but (speaking as a publisher) I'd be leery of advertiser fraud.

It can't be any worse than the regular click fraud on the content network. ;) I'd venture a guess it would be FAR less actually.

I would also bet G will use a model similar to what it does now. The more money an advertiser will bring to G and the publisher, the more likely his/her ads are to show. This would likely mitigate most attempts at fraud. The lower the conversion rate, the less the advertiser brings G and the publisher, so the MORE he would have to pay per action to be shown. (just a guess of course).

5:14 pm on Mar 20, 2007 (gmt 0)

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Sounds good. More options for advertisers means more advertisers will signup! Right now folks that want a CPA model are going elsewhere for it... Google can reel those advertisers in, bring more ad dollars to distribute to the Adsense network.

A big plus in my opinion for Adsense folks.

5:16 pm on Mar 20, 2007 (gmt 0)

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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.
5:17 pm on Mar 20, 2007 (gmt 0)

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It sounds very good, I believe it will be a hit.
5:17 pm on Mar 20, 2007 (gmt 0)

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In Google's version of CPA, publishers aren't affiliates of the advertisers; they're simply being paid for whatever the advertiser deems a conversion (e.g., transactions, leads, or even time on site).

Publishers aren't affiliates of the advertisers, but are still subjected to the lead, transaction, and sale amounts determined by the advertisers.

Sounds more and more like classic CPA ads on affiliate networks.

5:18 pm on Mar 20, 2007 (gmt 0)

WebmasterWorld Senior Member ken_b is a WebmasterWorld Top Contributor of All Time 10+ Year Member Top Contributors Of The Month



Definitely sounds like an affiliate model. Especially if Adsensers are allowed to actually choose the PPA ads.

From the Inside AdSense blog:

Google can help make sure you find and display the most relevant, best-performing referral ads on your site. Simply provide a few keywords to describe your site and your users' interests, and you'll see ads automatically displayed that perform best for your site. No more constant updating, rotating products, or guesswork.
5:19 pm on Mar 20, 2007 (gmt 0)

WebmasterWorld Administrator webwork is a WebmasterWorld Top Contributor of All Time 10+ Year Member



Is it rationale to suggest that, given an increasing menu of options, at some point Google will have to be a bit more transparent about the anticipated revenue and/or revenue share associated with a choice made by a publisher?

Is "you will make more per action but may make less overall" enough of an explanation?

5:28 pm on Mar 20, 2007 (gmt 0)

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IMO, advertisers having more control over site-targeting and CPA ads, will hurt publishers who don't have a lot to offer their users; or publishers who currently offer very low conversions through their sites.

For example, an advertiser could not only site-target a specific website, but also determine whether or not a targeted CPA ad will convert based on leads, transactions, or pageviews.

That's a lot of control.

If the advertisers' CPA ad doesn't generate an "action", it equates to free advertising for the advertiser, and the publisher receives nothing for the click.

Classic affiliate ads.

5:37 pm on Mar 20, 2007 (gmt 0)

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Looks like it is a 30 day cookie set:
Note that advertisers will remain responsible for conversions that occur up to 30 days after a pay-per-action ad was clicked.
6:01 pm on Mar 20, 2007 (gmt 0)



Sounds good. More options for advertisers means more advertisers will signup! Right now folks that want a CPA model are going elsewhere for it... Google can reel those advertisers in, bring more ad dollars to distribute to the Adsense network.

I get a lot of affiliate-program inquiries, and I say "no" to many of them simply because they're too specialized to be of interest. If I have 5 low-traffic pages on Elbonian raft cruising out of 5,000 pages on the site, it's unlikely to be worth the hassle of signing on with Elbonianraftcruises.com and waiting to accrue enough commissions to get a check. On the other hand, if I could rack up commissions on a whole bunch of minor subtopics through AdSense, an AdSense CPA model could be interesting.

Also, let's not forget that Google isn't just talking about affiliate-style sales commissions. The advertiser can define "conversion" in a number of ways, and in some industries, pay-per-lead is more important than e-commerce transactions.

6:01 pm on Mar 20, 2007 (gmt 0)

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For the sites I handle acquisitions for, this sounds great. For my publisher sites, eh... Of course the devil is always in the details.

More options are always good.

6:35 pm on Mar 20, 2007 (gmt 0)

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I'd love to trade 10 stinkin' useless wonderclicks for 56 cents a piece for a completed sample order that results in a 2 dollar commission!

For one I'd know the ads target my audience much better and second: I'd finally know what to mess up my site layout for with far too restricted ad formats.

6:37 pm on Mar 20, 2007 (gmt 0)

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If I wanted CPA ads, I would join a CPA network. I cannot see why any pubs would be interested in this. Can we opt-out?
6:45 pm on Mar 20, 2007 (gmt 0)

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If I wanted CPA ads, I would join a CPA network. I cannot see why any pubs would be interested in this. Can we opt-out?

I'm guessing it won't be necessary to even worry about opting out. Historically Google delivers the best performing ads/types to your site that pay the best, since that benefits both parties (G and the publisher).

So if the CPA model is tried and shows it is not paying more than the CPC ads on your site, I'm guessing G will swap you back automatically. If you make more with the CPA model, more CPA ads will show. Etc.

Perhaps I'm too optimistic... =)

7:01 pm on Mar 20, 2007 (gmt 0)

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As an advertiser primarily, I'm not sure what the implications are for publishers, but for advertisers its got the potential to be really good. I hope Google implement it well. They have certainly have a good reason to try, what with everyone shouting from the rooftops about click fraud on their PPC services (possibly without great justification).

But if I were a publisher I'd be a bit reluctant for my income to rely another site's ability to convert. I wonder if publishers will be able to choose advertisers, or if conversion rates will be part of a new kind of quality score?

7:13 pm on Mar 20, 2007 (gmt 0)

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I believe this is the first nail in the coffin of CJ.com or may be it is the last nail.

[edited by: iThink at 7:14 pm (utc) on Mar. 20, 2007]

7:20 pm on Mar 20, 2007 (gmt 0)

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For the common advertiser, I think this will reveal how difficult (and expensive) it can be to generate a qualified lead.
7:21 pm on Mar 20, 2007 (gmt 0)

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I'm assuming Google is selecting particular advertisers to participate in the beta.

Any idea if you would have luck contacting them to be included? I'd love to be in on the beta-testing for this from the advertiser side.

7:36 pm on Mar 20, 2007 (gmt 0)



In the AdSense forum, Hobbs pointed to a Google page that explains the program to publishers:

[google.com...]

As a publisher, I'm a little disappointed. The program looks more like Commission Junction than AdWords/AdSense. The publisher has to select the ads and decide where to put them. The ads don't compete with auction-based (AdWords/AdSense ads), either.

I'd be more interested if the ads were contextual and served automatically by Google.

7:43 pm on Mar 20, 2007 (gmt 0)

WebmasterWorld Administrator skibum is a WebmasterWorld Top Contributor of All Time 10+ Year Member



As an advertiser, this is another incentive for you to hand over your conversion data to Google and tell them exactly how much they should charge you for your advertising.

Advertising and affiliate marketing are two very different things. Affiliates sell stuff and have control over almost all aspect of the way they do that, advertsing is generally much more passive. Will affiliates have control over the way these PPA ads are used or will it just be like slapping up a block of AdSense ads on the site?

It also brings up another question. At what point do advertising mediums and good content sites start to vanish because the advertising they run serves to brand, to build awareness & to educate but does not lead to immediate sales?

7:50 pm on Mar 20, 2007 (gmt 0)

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slapping up a block of AdSense ads on the site?

[google.com...]
Thats what it looks like to me. I think I'll stay with the aff networks I'm using now. (that pay me many 100's of times what adsense ever has..)

Google Introduces Pay Per Action

on the positive side however, I would expect this area to have fewer instances of click fraud, advertising by MFA's, arbitrage, etc. )

[edited by: simey at 8:00 pm (utc) on Mar. 20, 2007]

7:51 pm on Mar 20, 2007 (gmt 0)

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This is the natural evolution of Adsense. The main reason advertisers pay for Content-Network clicks on publishers' websites is with the expectation that they will turn a profit on the incoming paid visitors.

If advertisers cannot break-even or profit from clicks on a publisher's website, eventually there will be no next/greater fool to take a chance and advertise on the publisher's website.

So, if a publisher can't get any advertisers to pay per click for contextual ads, they should be grateful that the CPA system gives them an alternative method of generating revenue.

7:59 pm on Mar 20, 2007 (gmt 0)

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People have been forecasting the death of CJ for 5 years, and everyone's been wrong so far. If anything, this makes CJ more valuable as people will realize the low quality of G's Content network and reaffirm the better value of CJ's affiliates.
8:04 pm on Mar 20, 2007 (gmt 0)



If anything, this makes CJ more valuable as people will realize the low quality of G's Content network and reaffirm the better value of CJ's affiliates.

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.

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