There are two typical complaints as to why most people disagree with this idea.
a) People don't want to reveal their price per action
b) The ramp up time on PPC is one click (you start paying right away, so no risk to Google)
My rebuttal to these two points are
a) This is an unreasonable statement because Google has no idea what action you paying for. Are you paying them just because someone visited a help page or because someone bought your product? But for the tin-foil hat crowd, you can still just do a flat bid and take your chances with click fraud.
b) The PPA system would work like this: a flat bid is put in place until your first (or nth) conversion, at which point your new bid is a rolling bid based on your price per action.
You continue to use the flat bid until your nth conversion until you reach your daily budget, at which point your campaign shuts off and says the keyword isn't doing you any good.
Such a PPA system will encourage users to utilize conversion tracking and allow Google to have much more complete, accurate data which leads to several advantages, the two most important ones are:
- Better understanding on googles part when your keywords are effective and when they're not. They can find tune to optimize conversions much much better.
- Much easier to track down click fraud. If certain ip subnets or addresses are not converting at all, Google can smart price them much more appropiately.
I have a feeling that this is where the industry is heading. As I said above, I feel the key change they're going to make beyond what they're doing right now is the ability to switch from a flat bid to a pay per conversion automatically after N conversions have occured and to keep that bid at a rolling average as new conversions occur.
"but you can't trust the advertisers to report all their sales".
This is a complete red herring. The fact is, Advertisers will probably *OVER REPORT* their sales because they want to ensure that their bid is high enough to get circulation for their ads.
They key here is that this system is almost already in place with smart pricing.
The difference is that Google needs to clearly know who is properly tracking conversions and who isn't.
