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Google launches pay per action program in AdWords & AdSense

Catching up on the last few days of news stories, Google AdSense has launched their new pay per action program for AdWords advertisers, meaning that publishers can now earn referral money through the AdSense program. The program is in beta for both advertisers & publishers, and AdSense publishers can apply to be a part of the beta, as can AdWords advertisers.

As you will remember, Google first began testing pay per action ads last summer.

Google announced today a limited beta test of pay-per-action advertising, a new pricing model that allows advertisers to pay only when predetermined actions are completed on their site. The pay-per-action model gives advertisers the option of paying when a customer makes a purchase, signs up for a newsletter, or completes any other clearly defined action the advertiser chooses. Advertisers have the freedom of defining the value of a completed action, ultimately giving them more control over their advertising costs. Designed to complement Google’s existing cost-per-click and cost-per-impression pricing models, pay-per-action pricing offers advertisers yet another choice, enabling them to reach their customers in a new way, and thereby better meeting their goals and objectives.

Pay-per-action ads are only shown on Google AdSense for content sites. AdSense publishers are able to choose whether they want to serve pay-per-action ads on their sites. Publishers can select between an individual ad, a shopping cart of ads, or a specific term or phrase that is relevant to their site’s content. Prior to ads being shown on their site, publishers can view the specifics of the ad, including company name, logo and products or services being sold. This visibility provides publishers with control over which pay-per-action ads are shown on their site.

With this new pricing model, advertisers can create text or image ads in addition to using Google’s new text link ad format, which are brief text descriptions that take on the characteristics of a publisher’s page. Pay-per-action advertising is available to U.S. advertisers. Over the next few weeks, Google will begin adding advertisers and publishers to the beta test. Advertisers and publishers can sign up now to participate and more will be added to the test on a rolling basis.

I think this new program is good for publishers, as it gives publishers an additional revenue stream for their sites. And because it offers money on a CPA basis, this means that a single click from a publisher site has the potential to earn that publisher much more money than a regular AdSense ad would earn.

I have an interview planned with Google, so I will have more information as well as my own perspective on the new program coming soon. In the meantime, both the AdSense blog and the AdWords blog have more information.

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7 comments to Google launches pay per action program in AdWords & AdSense

  • Good for publishers? Jen, come on. Doesn’t this simply further shift the risk from the ad network (Google) to the publisher to perform? What control does the web publisher have over the advertiser’s landing page, its products & services, its prices? None! This is a step back and a risk shifting exercise for Google.

    We have figured out how to deliver a name your price CPM model, not sure why Google, with its legions of quants, can’t do the same. It is time ad networks shouldered some of this risk themselves.

  • I agree with Jay Sears that the new program shifts more of the burden of making the advertising work on to the publishers. This model has been successfully run by Affiliate Networks, but these networks do a lot to work with the Advertisers on optimizing the landing page and aquisition processes. Jen, in your interview with Google, it’ll be great if you can ask what kind of tools/services Google will provide to make this program successful. Also, I’m curious why these CPA ads will only run on the Adsense publishers and not on the Google Search Results page — shouldn’t Google take on the same risks that it’s asking of its publishers?

  • You failed to place emphasis on the most important part of this news:

    The new google ads will be the first that do not say “ads by google” or “sponsored links” anywhere whatsoever.

    These ads will look exactly like navigation links, with no warning to users that they are about to click on an ad.

  • Derek Micah

    I think Jay’s and Shanthi’s comments overlook the fact (perhaps somewhat conveniently) that Google is applying the world’s most powerful yield optimization algorithm and richest auction in AdSense. Sure, publisher’s don’t have control over the landing page, products and services et al but with the CPA model that will quickly become the advertiser’s problem if they want to get exposure and sales. Publishers care about money, and if they’re rational will chose the network with the highest RPM returns for their content. AdSense has been a clear winner on this front, and I don’t see CPA slowing that down much — in fact the opposite. Finally, it’s the choice of the publisher as to whether to accept ads in the new pricing model.

    No dis on ContextWeb — great product and people there.

  • James

    I think you’re wrong… publishers/bloggers will be totally screwed. This is the beginning of the end and I’m really hating Google for this :( :( :(

  • Bobo

    Jen, I have to believe Google paid you to say “this would be good for publishers”

    This is going to SUCK for publishers/bloggers… this will cause people to lose their homes and who knows what else…

    Whatever happened to Google’s slogan “don’t be evil”?

  • Megan

    I’m relatively new to this material specifically, but why would this be such a problem for bloggers/publishers if they have the option whether to display CPA ads or not? The adsense participants are simply getting more credit for channeling traffic to other sites, and possibly boosting somebody else’s business.

    Yes, they have little control over whether or not the landing page will ultimately complete the sale (that’s the advertiser’s problem), but if the publisher/blogger can pick and choose which CPA ads to serve, why is that a big deal? Would you not be able to check ahead of time the quality of the site you’re serving ads for?

    It sounds to me that the pressure would also be on the advertisers to convince adsense publishers to advertise for them.

    Am I not understanding this correctly?

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