Google Pay Per Action

Posted March 20, 2007

Alright! Looks like Google is beta testing a pay-per-action advertising system. This is a good thing for online businesses that generate money through visitors actions on their website -- checking out a shopping cart, signing up for a mailing list, that sort of thing.

This is the logical next step in online advertising.

We started with pay-per-impression, where an advertiser pays every time their ad is displayed on someone's web page. This isn't particularly favorable for advertisers, because they're paying whether or not someone is paying attention to their ads.

The solution to that problem was pay-per-click, where an advertiser pays every time their ad is clicked on. That pretty much guarantees that the person who clicked found something compelling in the advertisement, which provides advertisers a really great way to figure out what ads were most effective, and ties the cost of their advertising directly to the public's interest. The downside for advertisers is that click through doesn't guarantee a conversion, and so a really great ad would end up costing a heap of money if the website didn't fulfill the user's hopes and dreams.

Which brings us to pay-per-action, where an advertiser only pays when someone clicks an advertisement AND follows through with a particular action -- like checking out a shopping cart, or signing up for a mailing list.

I dig it. Right now is a probably a great time to get into pay-per-action, because there aren't many businesses competing for keywords and placement, so there's probably some good deals to be had.

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