Google Pay-Per-Action -- What Do You Think? - Webmaster Forums - Webmaster forum for HTML, PHP, ASP, CSS and more

bronz · 04-24-2007, 07:09 PM

Pay-Per-Action (beta):
Pay-Per-Action (beta):
Google AdWords Pay-Per-Action Beta

I think it's potentially bad news for publishers.

Lets say that first-tier affiliate programs (like adsense) have an average conversion of anywhere from 8-10%. Any fluctuation with CPA conversion rates (and I've not heard any strong arguments that they will be higher) will mean definite turmoil for CPC Affiliate programs. Bids will change everywhere on both advertising schemes and the door is wide open for fraud.

And I believe, though I'm not sure, that users can define what an "action" is - who's to say they won't define a click as an action, thus making all the PR Google is telling their advertisers about the benefits of PPA fluff?

And what if the advertisers get to decide what an "action" is, thus deciding which clicks they'll pay for? Alarm bells should be ringing for publishers everywhere.

Just wait til Google incorporates this into their toolbar and EVERY click that brings in a sale (whether a company actively advertises with Google or not) earns a commission to the clicker. Who's going to police that? Anybody working with online search can see a myriad of opportunties to cheat PPA - good thing our mums raised us better than that.

I know that PPC is fraught with fraud, but like the old caveat goes, Buyer Beware. Not all affiliate programs are created equally, and higher bids do NOT mean less clickfraud. In fact, I see more opportunities for fraud (both by publishers and advertisers) with PPA. I think the PPC model works best - it's transparent, earns solid results and revenues, and is in fact easier to monitor against fraud. It also compliements what advertising is supposed to be - a message from the firm to the consumer.

Advertising is not just about earning a sale for everytime someone sees your ad. Advertising creates brand recognition, exposure, and more often than not lead to indirect sales. Paying for every click to their website costs advertisers more, but its part of the WHOLE buying process. PPA is like saying to the TV company "ok we're not going to pay you for airing our commericial, we'll just pay you everytime somebody buys our product and mentions your TV station".

bronz · 04-24-2007, 07:11 PM

Another thought just struck me on conversions.

While I think CPA conversions will be significantly lower than CPC, I still think the big problem with CPA is a) who's going to define what a sale is and b) who is going to settle the inevitable disputes between publishers and advertisers? Clickfraud, so prevalent in CPC, is nothing compared to the potential in CPA.

Why lower conversion rates with CPA? Because the bids on CPA have to be much higher than on CPC for publishers to still make the same amount of money. Say advertising in Google gets 10 sales out of 100 clicks - in other words, advertisers get 10% conversion with Google. With a CPA model, publishers won't be paid for the 100 clicks, but only for the 10. Therefore, for publishers, the bids should be 10 x as high as they are now.

Will they be? Will advertisers paying 15$ for a click simply switch it up and pay 150$? Probably not. So, most publishers won't go for this model (if Google gives them a choice, which they surely will) and the ones that do will probably try and cheat it, leading to lower conversions and tons of clickfraud.