Google Launches Cost Per Action AdSense

rustybrick writes "Google has launched an invite only test of CPA (cost per action) AdSense ads. So instead of getting paid per click or per impression, you now can get paid for an action, such as a sale or lead referral."

Comments

That's where the money is.

[celardore]

The point of sale or is right where the money is, so it makes sense to test the market with it. I'm sure that Google would deem a direct referal to a sale to be worth more too. It will be interesting to see how the revenue for the publisher and the costs for the marketer woulr work out.

Re:That's where the money is.

[TubeSteak]

I'm sure that Google would deem a direct referal to a sale to be worth more too.

Google would, but their valuation will be reflected in the minimum price, not the market price.

What's curious is that they're putting these ads in a separate network, such that you can put both types of Google Ads in a website.

It'll be interesting to see how the mix works out.

Advertiser Fraud

[numbsafari]

I worked for a company back when no one cared about making money and we were looking at building something similar. One of the chief concerns we had at the time was how to prevent fraud on the part of the advertisers: ie, if a user clicks through and ultimately makes a purchase, did the advertiser properly track that and then report it back?

There are a couple of ways publishers can also loose out: for instance, if a user clicks through but doesn't make a purchase only to return to the advertiser's site the next day or week and make the purchase, will the publisher be compensated appropriately?

This is definitely a great opportunity for publishers and advertisers by increasing quality over quantity. However, there are a lot of potential pitfalls for the publisher.

Will google be able to properly intermediate? or will they tend to side with their big advertisers when issues/complaints arise?

Re:Advertiser Fraud

[leonmergen]

Well, since the CPA ads are in a separate pool... will this pool also work in a similar way as the "other" pool, as in, that the highest-revenue ads are the most likely to be picked?

If this is a case, an advertisers who frauds will logically be picked less and less, so the damage done will not be that big. Something along this line sounds like a "natural" solution to the problem, /me thinks..

Re:Advertiser Fraud

[panaceaa]

If a point-of-sale site pushed their transactions through Google's new GBuy service, advertisers would have no way to hide actions resulting in revenue. Perhaps the invite-only aspect of the launch is designed to focus on businesses that are planning on using GBuy?

Re:Advertiser Fraud

[Breakfast Pants]

Other obvious though(because surveys might be a bit too intrusive, and unreliable): simulate paying customers in a statistically relevant way yourself and see if the sales are getting reported.

Re:Advertiser Fraud

[Ark42]

I'm more worried about the 3rd party advertiser committing fraud, since that is basically all Commission Junction seemed to be back when I tried it. I paid lots of good money to sign up for a service where 3rd parties would place ads linking to my website on their webpage via CJ, but almost every single sale that results from that channel was the 3rd party themselves using a stolen CC and placing an order so that I pay CJ, CJ takes a cut of the money, and the advertiser who placed the fraudulent sale gets a cut of the money, then I get stuck with a bunch of chargebacks. CJ really didn't have any incentive to stop that kind of behavior, or weed those people out, since they still get a cut of all the sales themselves either way.

Re:Advertiser Fraud

[BenSnyder]

You have to think about how the whole Google ad system works. On the publisher side you have AdSense, on the advertiser side you have AdWords. To tie it all together you have Google Analytics. The goal of Google would be to sell leads or sales: the freaking holy grail if you're me and managing client accounts. If I can set a max price on what a sale is worth to me and have it delivered for that amount then the nirvana of advertising is upon us. I'd be willing to drop some Google Analytics code onto my site to track its usage. As a part of that I'd also set up goals to track sales or leads and use Google Analytics' revenue tracking tool. Many of my clients do that already and they're already tracking new vs. returning visitor CPV and revenue by search engine and search type and by dozens of other meaningful but anonymous statistics through Google Analytics. Trust me, fraud isn't going to be a drop in the bucket because if it worked you'd have every advertiser beating down a path to Google to pay up for some of that Step 3: profit!

This is something I've been waiting for

[Orange Crush]

Working at a company that manages pay-per-click ads, pay per action is something we've been waiting for a long time to come over the horizon. I'm so glad Google's rolling it out, even if it is only on a test basis.

"Clicks" are abstract concepts and very difficult to sell to less tech-savvy business people. They want a better measure of their return on investment for their ad campaigns. A number of companies offer call tracking, which is easier for businesses to grok . . . but a call != a sale . . . or even an actual lead.

This is a welcome step in the right direction, IMHO.

Time without Pants!

[drewzhrodague]

This is awesome news for me. This means I can spend more time at home without pants!

Every time Google comes out with a new way to pay people like me to do advertising, is almost an entire additional month that I can spend at home without any pants on. Who needs a recruiter, when I don't ever have to leave the house?

Re:Time without Pants!

[IWannaBeAnAC]

Hmm, there should be a moderation for +sqrt(-1): weird

Trust issue

[crummyname]

How do I trust that the advertisers will accurate report sales generated by my leads?

Re:Trust issue

[grahamsz]

Well it's a switch from where it is now, where the advertisers have to trust the third party webmaster/web users to send them real clicks.

This model is much more amenable to the people spending the cash, therefore i'm sure it'll become popular.

Re:Trust issue

[smbarbour]

The same way that you trust them when the method is CPM (Cost per mil, or per 1k impressions) or CPC (Cost per click).

They (The ad agency) trust that you (the advertised company) will provide an accurate report, just as you trust that they aren't padding their impressions/clicks with phony data.

This is generally done via tracking "pixels" on the contact and confirmation pages. I use pixels loosely as they are rarely images (albeit frequently implemented via img tags).

Re:Trust issue

[shird]

I imagine Google would use your reporting of conversions to determine how effective your ad is, which in turn would affect how often it is displayed. If you report no conversions, youre ad wouldn't show up as often. Report plenty of conversions, and your ad is more likely to be shown. So it would be in your interest to accurately report your conversion rate.

Step 1) Profit!!!

[StikyPad]

you now can get paid for an action, such as a sale or lead referral.

I'm in. How much for the names and addresses of my soon-to-be-former friends?

Google and Brothels...

[frosty_tsm]

Now, both are doing a "Cost Per Action" pricing scheme.

Who on earth clicks on ads? Do you?

[Bromskloss]

I still don't get it! (and sorry for nagging about it, again) Is there a single Slashdotter here who clicks on ads? (assuming you haven't got them filtered (thank you, Firefox extensions)) I'm not sure I have even done it for experimental purposes. I _never_ do it. Not the flashy ones, not the discreet text ones. Why would anyone do it? If you're looking for something, you go get it. If not, you don't want anyone telling you to go get it. Gah, giving up control of yourself like that!

Re:Who on earth clicks on ads? Do you?

[DragonWriter]

I still don't get it! (and sorry for nagging about it, again) Is there a single Slashdotter here who clicks on ads?

Yes, especially on niche hobby forums where the ads are very often for things that both meet my interests and with which I was not previously familiar. Ads, in any medium, can be useful; OTOH, they can also be stupid. I don't block ads (I do block popups) -- if I site has ads that annoy me, I avoid the site.

Re:Oh crap...

[Anonymous Coward]

That's exactly what I was thinking.

With a pay-per-click I don't really care what gets advertised on my site as long as its relevant to the content of the site (which, thanks to Google, it is). I'm getting paid for sending folks there way.

With a pay-per-action system, I'll have to care about what gets advertised on my site, because if no sale is made, I don't make any money. So I'm not going to want to advertise (say) $3,000 hottubs, because even if it does result in a sale, its probably not going to be purchased immediately after follwing my link. Likewise, I'm not going to want to advertise for sites that make it difficult to make purchases or don't effectively sell their products.

And when you think about it, why shouldn't I be paid for helping spread brand recognition, regardless of the immediate results? Billboard space isn't leased based on the number of people who make a purchase after viewing the billboard. It is leased based on the number (and demographic) of people expected to see it.

No Pants...

[Seoulstriker]

Please, the man has no pants on. Please don't bring up "squirting" things...

+4?

[mnemonic_]

This is one of the least insightful posts I've ever read. Yes, sales make money; this is true. "It will be interesting" ok, anything else?

It already does work

[NineNine]

It already does work better than per-click for many reasons. The porn industry switched from per-click to per-sale, for the most part, about 5 years ago. Of course, as always, the porn industry online is ahead of the curve.

Re:Oh crap...

[panaceaa]

You're worrying too much. Google has just as much interest in receiving revenue from the advertising placement as you do. If someone posts an ad for $3,000 hottubs and the conversion rate is excessively small, Google won't want to display the ad either. Instead they'll display an ad that's more likely to result in conversion, and you'll both get to prance around in happy land.

CPA? Only for very likely things.

[shumacher]

I would only want to do CPA for things that are remarkably likely to happen. I wouldn't want, for example, to have my income depend on someone ordering a laptop. In fact, Google already offers referral links for Firefox (w/ Google Toolbar, natch), Google Pack, and Picasa. (They offer it for adwords and adsense, but I find that a less likely action.) These links require not just a click, but a specific result, like downloading the app and installing it, or signing up for a certain advertising program. These are fairly likely actions, I think, and even that doesn't yield strong results. Even on a site where I have a feature that is legitimately non-IE friendly, and I offer the Firefox link right below, I don't get a strong result.