All about Google's new PPA advertising product
Google is testing a new advertising system that allows businesses
to advertise on a cost per action basis. You can find Google's
own announcement here.
How does Google's new product work?
Until now, Google has primarily sold pay-per-click (PPC)
ads, so-called AdWords ads: advertisers pay when someone
on Google or a Google partner site clicks on the ad.
Google AdWords has one big advantage and one big disadvantage:
You only pay for clicks of potential customers, but you
risk paying a lot of money for nothing because of click
There has been a lot of debate around click fraud because
Google has a short term financial incentive to promote
it. Google's new advertising product is "pay
per action" (PPA). You don't pay per click anymore
but you pay when a customer takes further action, such
as requesting a catalog, signing up for a newsletter or
buying a product.
PPA advertising is meant to mitigate the risks of click
How can Google track the action?
If you use Google's PPA advertising product, then you
must use Google's conversion tracking code in the HTML
code of your web pages.
Of course, the advertiser has an incentive not to confirm
the action, but cheating does not make sense. Like PPC
ads, PPA ads will likely be ranked by profitability to
What are the consequences for the market?
Google will be able to better maximize revenues on its
advertising network, and it also should allay the concerns
over click fraud.
Google's new PPA program is in direct competition to affiliate
marketing networks such as Commission Junction and LinkShare.
Publishers could leave those affiliate marketing networks
and concentrate on Google's PPA program.
Yahoo und Microsoft will certainly offer similar PPA programs
in the future. The current players on the PPA market Snap and Turn now
face heavy competition.
What are the consequences for you?
If you already track the return on investment (ROI) on
your PPC ads, then you won't be affected much. If you don't
track the ROI yet, take a look at ROI tracking tools such
as AxROI which
can save you a lot of advertising money.
If you are a smaller advertiser, then PPA advertising
could mean that you will pay less for better results in
the future, and that you will never worry about click fraud
Note that Google's pay per action program is currently in
beta test. This means that there are some limitations:
- participation is by invitation only, you must fill out
form to request participating in the program
- the PPA program is currently only available to US customers
- ads are limited to Google's content network of partner
sites (Google AdSense)