AdSense Cost-Per-Action (CPA)

Thanks to stOx at Webmaster-Talk.com I learned earlier today that Google has begun testing Cost-Per-Action ads through AdSense. The new ads seem like the next wave in advertising for Google and based on the information I have come across it sounds like a good idea.

At the moment it’s invite only and the invitation comes straight from the AdSense team to your inbox. Until that changes there’s no reason to look for ways you can use the new ads on your site. For now a select few will have the ads and Google says it has based the invites on which sites match up best with the current advertisers. At the moment the ads will come from a limited group of high quality advertisers, though I’m sure after the test period is over the ads and the sites which can display those ads will be open to more advertisers and publishers.

How Cost-Per-Action Will Work

The basic concept is simple. Publishers place an ad on their site and get paid when someone clicks on the ad and then performs some action on the other site. The action might range from making a purchase to filling out a contact form and generating a lead. Advertisers will only pay when the action is taken and instead of just for the click.

Publishers will be given more control over the ads and be able to choose the specific ads they want to display as well as being able to use language to promote the ads a little more than is currently allowable such as ‘I recommend this product’ or ‘Try JetBlue today.’ There will still be limits as to what you can say and Google is quick to mention they are allowing the promotion in part because the program is currently in testing.

For Advertisers

The main benefit to advertisers would seem to be that they pay based on the action instead of the click. It’s much easier to make a fraudulent click than to perform a fraudulent action. If the goal of those committing the fraud is to profit from displaying an ad it’s not exactly cost effective to have to make a purchase in order to collect a percentage of the purchase price.

Additionally as an advertiser I would much rather pay because someone has actually bought something or at least given a strong indication they will buy something than to simply have them visit my site. I’m sure the cost-per-action will be far greater than the cost-per-click, though I also suspect the ROI will also be greater for the cost-per-action ads.

For Publishers

The main benefit for publishers will no doubt be a higher payout for each successful action that starts through an ad on their site. The greater flexibility over the ads will also be of benefit allowing publishers more control over what ads they want to display on their site and I suspect more options in incorporating the ads into their site.

On the downside for publishers is the fact that more action needs to be taken in order to get paid. There will also be a certain loss of control since much of the success over whether the action is taken is out of the control of the publisher This loss of control may lead some publishers to not adopt cost-per-action. Of course this will probably depend on the actual return. If the ads payout 10 times for an action what other ads pay for a click it may well be worth it to give up some of that control.

Cost-per-action ads are most likely a swing in the favor of advertisers who have been hit by fraudulent clicks. Advertisers are the backbone of the whole AdSense program since without them there’s no money flowing through the system. All of us publishers may complain if we don’t like the system or if it doesn’t pay as much, but chances are we’ll still take the money and continue to use the ads. More than likely publishers will have the option to use the cost-per-action ads if they want or continue to use the cost-per-click model as they currently are. And for now it’s not even clear if all publishers will even be gven the option to use the new cost-per-action model as it’s still invite only.

As with all things in testing and many things with Google only time will tell whether or not the new advertising model is a success. It’s hard to see how advertisers will object to paying per action as opposed to per click and as long as publisher revenue remains roughly the same I doubt most will object either. Should I become one of the lucky ones invited to join the program I would gladly test out the cost-per-action ads in order to see how well they’ll work.

Resources

Google Launches ValueClick Killer
Google Testing Pay-Per-Sale AdSense?
AdSense Testing Cost Per Action

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