Google Pay Per Action : Affiliates, Text Links & Click Fraud Implications

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Yesterday saw the launch of the Google pay-per-action (cost per action) product on AdSense.

I didn’t have a chance to write about it (or even think too extensively about it) because I was in meetings literally all day Monday and yesterday and doing too many other simultaneous things. It’s often the case that I’ll get a briefing (or several in a day) and within a very compressed time frame thereafter have to formulate a thoughtful opinion about what I’ve heard and its various implications.

To say the least, that’s very challenging in some cases. In others it’s not. Regardless, it’s a kind of an insane by-product of the Internet news culture we’re now all in. But enough complaining . . .

The “action,” in Google’s pay-per-action, is defined by the advertiser as it was on search engine Snap, which launched a version of this maybe 16 months ago. Snap, needless to say, didn’t get much adoption and has changed its model.

Yesterday also saw the launch of text links by Google, which others have been doing for some time. Barry Schwartz at Search Engine Land has a good overview and explanation of the programs.

Many people are seeing the advent of Google PPA not merely as another option for advertisers and publishers or a way to address click fraud but as a direct or indirect assault on affiliate networks such as Commission Junction. (See, e.g., Michael Arrington.) I think that we’ll have to see how widely embraced Google’s program is and what the empirical fallout is accordingly. I’m not ready to proclaim the death of these networks. I think that marketers want alternatives to Google and I’m sure some of these programs are working quite well for them.

It also won’t signal the death of lead generation either.

Some have argued that PPA is about click fraud. I think that PPA is only probably a partial response to click fraud — or addressing click fraud is a “secondary” motive for Google PPA here. A CPA model, in my view, is a natural evolution of the menu of advertising options for a company that wants to be a “one-stop shop” for advertisers. I also don’t think it ever appears on the AdWords side because it starts to confuse bidding. How do two advertisers bidding on the same keywords, where one is paying for clicks and the other “leads,” co-exist in the same auction? That’s already a bit of an issue for brands vs. direct response advertisers.

But Google told me that there’s no difference from a consumer perspective in terms of how click and action ads appear; it’s merely the model that’s different.

But PPA probably does make AdSense more interesting for certain marketers (and some publishers). Indeed, AdSense, which historically was less desirable to marketers than AdWords, has now become a kind of lab or arena of innovation at Google (i.e., graphical ads, video, etc.).

I also asked Google about PPA on Froogle, which would be very natural. No plans for such an expansion at the present time.

In contrast to PPA “inevitability,” I’m not sure why Google went with text links. I don’t like text link ads as a user myself and I also think they tend to be confusing to users generally. And one of the things Elise Ackerman (of the Mercury News) brought up and we discussed in our compressed five minute interview yesterday was whether Google was entering an ethical gray zone akin to the dubious realm of pay-per-post here. In other words, were they creating incentives for bloggers or other publishers to endorse or promote advertisers in the context of articles?


It’s also possible, if I’m simply writing about products or trends, whatever, and I use the code that it will activate those brands or terms and turn them into ads without me having create a post to promote them as such. Again, as with the impact on affiliate networks, it’s an empirical question in terms of what impact it will have on behavior. I’m not sure how it will in fact play out. And, again, on this one I’m not sure why they’re playing with text ads.

Certainly Google doesn’t need the money — as it were.

Greg Sterling is the founding principal of Sterling Market Intelligence, a consulting and research firm focused on online consumer and advertiser behavior and the relationship between the Internet and traditional media, with an emphasis on the local marketplace.

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  • Re: addressing click fraud

    As an owner of a PPA Network (traditionally referred to as CPA – Cost Per Action. But of Course GOOG loves to have their own terms) I can tell you that opening up CPA actions to their publishers opens GOOG up to a whole new world of fraud. People will take the actions themselves and get farms of people to ‘subscribe to your newsletter’ or what ever it might be in order to generate their PPA commissions. Now they can make $5-$10-$50 per action instead of a few pennies a click.

    A good portion of our time is spent filtering out fraudsters trying to game our CPA systems. GOOG will have the same problem 10 fold. or 100000 fold as they have a few more affiliates than we do…

    That being said, I am VERY excited to see GOOG moving into this space. This is the pricing model of the future and will open up many new advertisers and publishers to the benefits and gains to be had through this system. Thus massively increasing the market for us all.

    Jason Bailey

  • Hello Jason – I am not sure if I agree with you.

    You talk about the action being carried by the publisher to generate revenue .. but now google can say – hey adevertiser its your problem since you didnt define your action tight enough – and google can somewhat keep their hands out of the scenario. May be to reduce the fraud to zero advertiser need to define the action as a purchase . But it is advertisers responsibility and not google’s …
    With this system, goog can keep their hands off the fraud, with CPC advertiser didnt have any option to prevent fraud and hence the responsibility lied on goog.

  • BTW you guys would have read eric’s famous comments on preventing click fraud – let it happen 🙂

    If for CPC this was the solution, then for this model, goog doesnt even want to listen about it 🙂

    Jason – I may be completely wrong since my assessment is theoritical, and you seem to be real guy…