Google Releases Pay-Per-Action - Should Affiliate Marketers be Scared?

It was rumored about last summer, and this spring it has become a reality. Pay-per-action (PPA) has officially been released in beta form for users of Google AdWords. Pay-per-action, or cost-per-action, as both names imply, charge only when a specific predetermined action has occurred on a website being advertised though Google AdWords. Clicks & Impressions As of now, there are a few other options an advertiser can choose to be charged by, the most popular being the pay-per-click platform. Advertisers can also choose to be charged based on 1000 impressions for text ads, image ads, and video ads, regardless of number of clicks. Although the terminology changes, most traditional advertising, such as TV, print, and radio charge a similar way -- number of eyeballs seeing the offer. At least with a click, the advertiser knows a specific interaction took place with the ad verses an estimated pass-along-rate with newspapers or average number of cars drive pass for pricing a billboard. Cost-Per-Click -- what a concept! Only charging when a user visited a site, verses viewed a banner, was a breakthrough pricing structure ten years ago when first introduced by Goto (later bought by Overture). With the click-fraud media alarmists scaring the public and small to medium sized business owners working on a fixed budget, advertisers are demanding more and more control and want even less risk on their part. Now they have their wish. So far pay-per-action is only available on the Content Network (Ads by Goooogle on related sites) as opposed to the ads labeled sponsored listings on Google search & Search Partners. There is a waiting list for the general advertisers, no doubt not applicable to many of Google's best clients spending in the millions. LevelTen is in line for at least one client. In my opinion, cost-per-action is going to work even more effectively for small to medium-sized businesses less focused on branding, looking more for direct response and seeking effective and very measurable ROI based on media spend. Conversion, Conversion, Conversion For current advertisers already keeping a close eye on cost-per-conversion, leads, and ROI, this transition will be quite simple. Pay-per-action will be tied to what advertisers have earmarked as conversions on his or her site -- whether that be a newsletter sign up, form submission, contact page view, or even a direct sale. All of these could be considered conversions, and the advertiser could assign a separate value (or reserve bid) for each one. To read more about ROI, ROAS, and visitor value on Google AdWords, see this AdWords ROI forum thread. Should Affiliate Marketer's be Scared? Although I am not an affiliate marketer, I do not agree with Marketing Pilgram Andy Beal that this new format will be a threat to affiliate marketers.

To me, it sounds like a clear threat to the likes of Commission Junction or LinkShare or any other affiliate marketing network. Google, for all intents and purposes, has just entered the affiliate marketing arena, with the battle cry that they can do affiliate marketing better than the affiliate networks can.

Although it may discourage affiliates from bidding on Google AdWords, Google was already doing that last year by restricting sponsored links to only one ad to lead to a particular web page per query, so they seem to have manged just fine so far. Affiliate markers and website owners will move on and find many other innovative ways to maintain their trade traffic for commissions relationship.