Google Pay Per Action

BradleyT · #1 03-26-2007, 11:45 AM

http://services.google.com/payperaction/

This is definitely cheaper for advertisers than using AdSense.

JoshK · #2 03-26-2007, 11:57 AM

My thoughts vary on this.

I think it will be great for advertisers obviously not so great for publishers.

First of all there's going to be issues with the tracking. I'm sure there's going to be some blackhat "hacks" before too long that will mess with the tracking.

Second, if you're a publisher you're better off just focusing on affiliate programs rather than ppa stuff probably.

I've not really looked into this much though so we'll see what happens.

Cheers,

Josh

BradleyT · #3 03-26-2007, 12:17 PM

A brief explanation for anyone who doesn't understand how this will work.

My e-commerce site sells widgets. My cost is $20 and I sell it for $40. Normally I'd use google AdWords and pay say $.75 per click for the term "Red Widget". Using AdWords requires a lot of fine tuning and tweaking on my part. I have to wait until I get a few hundred clicks and see how many sales I got. So let's say I ended up with 4 sales per 100 clicks. That's 25 clicks at $.75 each or $18.75 I had to spend in advertising per sale. Since I make $20 profit per sale after advertising I've only made $1.25. And as time goes on I have to continually monitor how my ad is doing and how much per sale I'm spending to make sure I'm not spending more than $20 in advertising per sale.

With this new system I tell google that I'll pay $15 per sale of my Red Widget. I don't have to monitor anything. After advertising I make $5 profit per sale. I'd love to make 10 million sales per day because I know I'm always making a profit compared to traditional adwords where I have to monitor nearly daily how much I'm spending.

You as a publisher (using adsense) would get $60 per 100 clicks (I made 4 sales and paid $15 per sale). This could be good or bad. In my opinion if you have a "real" site that isn't some crappy made for adsense site your traffic may convert better than 4:100, thus giving you higher payouts than what regular adsense was paying you. You also get to pick and choose which ads you want to show.

I didn't see any details about what % cut google takes. The way to test this would be for an adwords advertiser to put up an ad and for and adsense user to report how much google will pay them for that ad.

JoshK · #4 03-26-2007, 12:53 PM

But the thing is bradley, if someone is making a site that can convert at 4% (for untargeted adsense type ppa ads very unrealistic) they would convert much higher with that site targeting an affiliate product. Basically cutting out the middle man (google).

Cheers,

Josh

KidLifeCrisis · #5 03-27-2007, 04:34 AM

[ QUOTE ]
My thoughts vary on this.

I think it will be great for advertisers obviously not so great for publishers.

[/ QUOTE ]
This is basically what I posted in my blog, though more elaborate. I have to agree on this general premise though.

Evan · #6 03-27-2007, 05:22 AM

Do you guys really think this thing is going to end up getting structured in such a way that smart advertisers shouldn't keep using Adwords? BradelyT's example doesn't seem quite realistic to me. It seems more likely that that company would end up paying $19 or more on PPA, basically it would act like an insurance policy where publishers (and google) takes a vig to insure that the advertisers can't lose money on the promotion.

If by "bad for publishers" you mean bad for sites set up just for ads and without any quality content, then that's probably true.

BradleyT · #7 03-27-2007, 09:18 AM

[ QUOTE ]
Do you guys really think this thing is going to end up getting structured in such a way that smart advertisers shouldn't keep using Adwords? BradelyT's example doesn't seem quite realistic to me. It seems more likely that that company would end up paying $19 or more on PPA, basically it would act like an insurance policy where publishers (and google) takes a vig to insure that the advertisers can't lose money on the promotion.

If by "bad for publishers" you mean bad for sites set up just for ads and without any quality content, then that's probably true.

[/ QUOTE ]

The problem that many sites have is that adwords regular is just too expensive to make a profit. Click fraud is huge. Google admits that up to 10% of clicks are fraudulent while some companies have done studies to show it being much higher. Absolutely nothing is preventing me from going and clicking all of my competitors ads today and costing them $100+. With pay per action when the action is a sale, I can't cause my competitors money.

And why would I end up spending $19 or more? I set the price I want to pay and the people who show my ad have no clue how much profit I make on items. I'm certainly not going to settle for $1 profit on a $40 item as I'll be losing money after merchant fees (not counting labor).

majesty2009 · #8 03-27-2007, 06:40 PM

This is horrible for publishers and I think many would leave the adsense program. I think PPC works if done right. There is already benefit from displaying your ads on my site for free when no one clicks them, but still sees them. PPA would be stupid. I would just stick to affiliate programs. You cant tell me that many of my advertisers are not making money. They sell a million dollar home and pay me 50cents per lead. That is as cheap as it gets.

BradleyT · #9 03-27-2007, 07:32 PM

[ QUOTE ]
I think PPC works if done right. There is already benefit from displaying your ads on my site for free when no one clicks them, but still sees them.

[/ QUOTE ]

Are you trying to claim that google PPC text ads give branding benefits? Can you name any single company (besides eBay) you've seen in a google ad in the past 3 days?

Evan · #10 03-27-2007, 08:14 PM

[ QUOTE ]
This is horrible for publishers and I think many would leave the adsense program. I think PPC works if done right. There is already benefit from displaying your ads on my site for free when no one clicks them, but still sees them. PPA would be stupid. I would just stick to affiliate programs. You cant tell me that many of my advertisers are not making money. They sell a million dollar home and pay me 50cents per lead. That is as cheap as it gets.

[/ QUOTE ]
The only reason I can think of to be afraid of this is if you honestly don't believe what you're saying. If your ads generate sales I can't imagine this thing ending up with a structure where you wouldn't make more money.