Google is currently testing a new ad model, the "cost-per-action" ads. Basically, the advertiser no longer gets charged for clicks, but rather when the clicks result to an action that the advertiser is seeking such as purchases, membership sign-ups, etc...

I absolutely would love to sign up for this program as I would only be charged for traffic that turns into sale leads.

The current Pay-Per-Click model is flawed as I believe there is too much fraud in this and advertisers such as myself are loosing a lot of money in fraudulent or useless clicks.

What do you guys think? Would it cost too much to the advertiser?

More on this can be found in this press release: http://www.prweb.com/releases/2006/6/prweb403094.htm

I'm not so excited to test any new adv products at all. All big players on the internet marketd such as Google, Yahoo, MSN, etc. are moving in the same direction. A big war to get more and more money from advertisers.

You see how Google chnaged the searvh algorithm. Now you can see many irrelevant results ranked high on any search terms. The same is with adwords. You pay for targeted traffic but receive high number of clicks from Free stuff providers and etc.

I'm not exactly following how this will work because setting up conversions code is something that is managed on the publisher's end. They could simply remove the tracking code from their registration page and not have to pay??

I believe this is how the CPA model is even more flawed than CPC.

this would be great

I have been keeping my eye on this as well, and I am very excited about it. I have talked with several clients are already interested in it and I will be performing some ad testing, etc as soon as it comes out.

I think it is a great idea. However as Cscgal points out, it will be interesting to see how they actually roll this out. My bet is that somehow the actual conversion link is routed through Google and then redirected to the web site. This way they can count the "action" but it still wouldn't account for lead submissions etc.

It will be interesting, and if it is done right it could very well replace CPC.

Morty

Yes this a great idea I cannot wait for Google to release this.

i think that google will do following.
they will MAKE every site that wishes to use PPA technique to put some code (google's code) on the form where users are paying for services (or product or whatever) - so Google will know when the customer has paid for services, and that will bill the siteowner for the % of it.

and i'm sure that if siteowner will try to trick that system Google will put his site into the sanbox for-ever.

i'm really interested about this new way of doing adv. - but i will definetly wait for sometime while other guys testing it.

Hi,

They would most likely integrate this CPA strategy with their new Google Checkout service so the payment part will be handled at google too. This way there won't be any removing the tracking code.

Loren Soth

This subject really interests me, because although I have not used adsense or adwords, I plan to subscribe to both in the near future.

It might turn out to be good for advertisers, but I think the web publishers will really take a hit on this. It sort of takes the 'market competition' aspect out of ad placement. If an advertiser no longer has to pay except when there is a guaranteed action, there is nothing to keep them from sending advertisements to sites that are not even related to whatever is being marketed.

For example, if a person sells pet products, they have nothing to lose if their ads displays on a computing site. Even if only one in 10,000 buy something, they have still come out ahead.

Now if a niche site is bombarded with non-targeted traffic, they lose big time on their revenue.

Of course the smart thing for Google to do is to keep ads related to the publisher's content, but is there any guarantee of that?

They could create an order page like yahoo does for its store merchants.