Understanding Google Pay-Per-Action in Action

To me, Google Pay-Per-Action is the ultimate online advertising model so far.

Google Pay-Per-Action

In the past, there were advertising programs that are paid based on the number of ad impressions. That brought good profits for publishers but very low turnout for advertisers. Next came the pay-per-click where the advertisers pay only when their ads are clicked. Initiated by Goto (later renamed Overture, Yahoo! Search Marketing) and brought to mainstream advertisers and publishers by Google, this model became very popular but also introduced click fraud in a growing list of Internet scams.

Which is why I think Google’s Pay-Per-Action, launched a few weeks ago, theoretically becomes the ideal advertising model. It’s a bold statement to consider since the service is so young that the amount of feedback generated from users isn’t sufficient to conclude anything.

From the official Google Adwords blog,

Pay-per-action advertising is a new pricing model that allows you to pay only for completed actions that you define, such as a lead, a sale, or a pageview, after a user has clicked on your ad on a publisher’s site. You’ll define an action, set up conversion tracking, and create ads that publishers in the Google content network can then choose to place in new ad units on their site.

Scenario
So if we have a new site, in need of subscribers for our bimonthly newsletter release, we can advertise using Google Pay-Per-Action to boost registrations and ensuring we pay Google and its network only for ads that bring a subscribers to our mailing list.

Ad Formats
Existing formats in image and text supported by Google Adwords can be used. An ad format in the form of text link is also supported. For example, if a page was about used cars, the text “used cars” can have a link bearing the title “Ads by Google” and pointing to the desired call to action page.

Pricing
You basically dictate how much you want to spend for every successful transaction. I guess it would be much more expensive to advertise for a hotel booking or an airline reservation than on our e-mail subscription described above. Since results are virtually guaranteed, our acquisition cost has to be higher than the less reliable ad impressions or cost per click computations.

Tracking
All new features of Google that involve numbers can be tracked. After all, that’s what Google Analytics is for. We can track campaigns using the conversion tracking feature of Google Analytics.

Barry at Search Engine Roundtable illustrates a series of ads that can go together. In my own terms:

  • We need to book trains from Vienna to Munich. We click an ad to book tickets
  • We need to book hotel rooms while we are in the Bavarian city. We click an ad to view hotel rooms and book our desired place.
  • On travel we might need advanced booking of museums and paid attractions or reserve a place in time for Oktoberfest. We click an ad to view attractions, choose and make some reservations.
  • Onward flights to Brussels or Rotterdam. We click an ad to book flights.
  • I was told Amsterdam isn’t so safe for newcomers. We click an ad to get online insurance quotes and sign up.

Why Google Pay-Per-Action is great?
Ads don’t appear on any baloney web site that’s made for Adsense only; while publishers don’t pay these cheap ones until they deliver something, emphasis on quality over quantity is good especially if we consider those who visit those MFA sites are folks who are likely to book cheaper hotel rooms or subscribers who end up unsubscribing soon.

Question: Can this model eliminate click fraud?
Click fraud is specific to PPC campaigns and does not encompass PPA advertising so I believe it won’t affect click fraud at all. It may minimize click fraud if publishers rely less on PPC model and stick with PPA. As with fraud, this model can still get a fair share of the web’s unwanted purposes. Using the maligned email subscription above as an example, invalid email addresses and proliferation of ghost emails made for subscription-based PPA campaigns can happen. But this can be remedied with proper validation on the side of the advertisers.

In general, Google’s Pay-Per-Action service looks promising. Google has been known for its innovative ideas. Let’s hope this one is among them.