Google Pay-Per-Action Ads

Ken Yarmosh, Former Viget

Article Category: #Strategy

Posted on

Pay-per-Action (PPA) is an advertising model based on, of all things, actions. Its cousin is Pay-per-Click (PPC). PPC campaigns cost advertisers money each time someone clicks on their ads. PPA campaigns only cost advertisers money when someone takes an action. You may be familiar with both PPA and PPC without even knowing it. PPC ads are shown on Google all the time. They are the advertisements associated with keywords such as "web design" and "washington d.c. restaurants" and are typically shown in the right sidebar of search results. Google calls its program "AdWords" -- and it has been wildly successful ever since it began. There are a number of problems with PPC. One of the more significant problems is called click fraud. The idea behind click fraud is simple: click on competitor ads to run up their costs and run down their advertising budgets. Of course, Google, Yahoo!, and many others have made significant efforts to mitigate click fraud; but, it still happens. PPA is not without flaw, but will definitely further fight these sorts of issues. PPA is not a new idea. For example, Amazon has offered this sort of affiliate relationship with web sites who list their books or other products. Anytime someone clicks over to Amazon and actually purchases one of their products, the affiliate gets a small referral fee. But PPA is a new idea for Google. Google recently announced a limited release of the PPA model. PPA ads will show throughout their content network (i.e., on web sites running AdSense) and also through text link ads (i.e., publishers will be able to link directly to PPA ads). There's more to dive into; but, here are a couple of take homes: How much are you willing to pay for a lead? How much are you willing to pay for someone to buy a product? Those answers may vary but, hopefully, you have a good idea. If you know a new customer is worth $1,000, are you willing to pay $5 for a lead? Well, if 1 in 10 leads convert to an actual customer, that means you would spend $50 for $1,000 of new business. PPA in the Google context is going to be important, so stay tuned to when Google releases it to all advertisers.

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