March 27 2007

PPC versus pay-per-action

Will Google's testing of pay-per-action on AdSense, rather than the pay-per-click model reduce click fraud? That's the question being asked around the industry at the moment.

An article on Internetnews.com looks at what is an issue for any company which advertises online. Google's said that click fraud had no bearing on its decision to test the pay-per-action model on content sites in the US.

Matthew Tod, of agency Logan Tod comments:

"Google's launch of a pay-per-action facility promises to be one of the biggest shake ups in search marketing to date and we will no longer be ale to refer to it as PPC. This change will align Google's interests much more closely with businesses, similar to an affiliate model.

The big change is that relevance and price are no longer the only determinants of which adverts are shown. Conversion will become a key factor Google takes into account.

Google will have to balance relevance with potential revenue and to do this it will need to take into account the probability that an advertisers' site will convert the click into a sale. No sale, no income to Google.

It is likely that many businesses will take up this new payment model, especially smaller companies. They will raise their CPA to the maximum they can afford in order to drive volume.

This however will not be the answer, as the real key will be the conversion rate from interested consumers on Google to a sale (and hence fee to Google).

Our advice is to upgrade your web analytics, implement and optimise landing pages through a thorough testing programme. Look again at your product pages and checkout process."

Would anyone else like to comment?