Google Tests Pay-Per-Action Ads

On Tuesday, Google announced the wider rollout of their beta Pay-Per-Action advertising program, originally launched on a limited based in June 2006.  Available only in the United States, CPA on Google will enable AdSense publishers to choose from a selection of ads and will have more flexibility in promoting the ads, according to Google. 

When C|Net reported on the original program last June, they stated: “Because they’ll be tied to a purchase, the new ads are expected to be auctioned at higher prices than cost-per-click ads, which costs advertisers every time an ad is clicked on, despite whether it leads to a sale.”   

Pay-per-action advertising is a new pricing model for Google that will allow advertisers to pay only for completed actions that such as a lead, a sale or a page view after a user has clicked on an ad.  The advertiser will define the action, set up conversion tracking and create ads that AdSense publishers can select to run on their sites.  Smartly, Google is including view-thru conversions with a timestamp of up to 30-days for the post-click events so any action that results following the impression within 30-days will be credited back to the advertisement.

Over the last couple of weeks, Google has been taking incremental, but significant steps towards engaging advertisers with programs that recognize their need to be more flexible and receptive to the demands of the market.  There have been mounting complaints about Google’s inflexibilities.  Pricing has been increasing, technology integration has been restrictive, click-fraud was a huge issue, Analytics counts are well below other metric measurements and so on.

In January 2007, President of Interactive Marketing at AKQA Andrew O’Dell was quoted by ClickZ as saying: “We can’t use [Google’s] networks if they don’t allow third party serving … It’s not worth trying to maintain a separate universe. We’re not going to do a buy that’s got 95 percent of our inventory running on an ad server and the other 5 percent sitting there as an outlier.”

Agencies with significant buying power like AKQA have been vocal about how difficult it is to work with Google.  David Smith of MediaSmith was quoted in the same ClickZ article as saying: “We’d love to have them [as partners for branding campaigns], but they’re going to have to listen to what the agency wants, not what they’re trying to sell.”

Google has finally started to listen it, or so it seems.  After all, Andrew O’Dell is not alone when he said: “I think I could increase my Google spend in total [by a factor of two] if their network was competitive.”

In addition, Google must be feeling the pressure of MSN and Yahoo! – especially MSN.  It has been a while since MSN has done anything of significance, but for the first time their share of market has increased.  Granted it was one percentage point, but they went from 10% to 11% last month and Vista and Office 2007 Desktop Search has a lot to do with it.  Finally Microsoft has found its way to the desktop for search and it has done so with what appears to be a useful and attractive tool.  I have the search tool on my desktop and – aside from the hours it took to index my computer – it really flies now.  I found that not only does it find things within my computer really well, but it does a pretty good job at commanding my search needs online.  I still have my Google search bar on my browser which I am well trained to use, but if my browser is not open, I will give the Windows Search bar a shot – and that is a new behavior, which MSN is counting on.

So Google is on the move, again.  They are taking steps to increase their stride.  First it was banner ads, now we’re talking about video.  And now we have CPA.  Google is creating destination sites, and beginning the process of creating its own content and will soon have the command of its own communities (think Gmail, YouTube).  They offer analytics with Urchin and it is not limited to Google campaigns but rather to any advertising initiatives.  Granted it’s not the best measurement tool, but it works for the small-to-mid size advertiser and there is the long-tail.

So what’s next.  Are they going to step up and answer Andrew O’Dell’s call?  Do they recognize the onslaught of media dollars waiting to flow in with banner advertising when an ad server can be used to manage campaigns on Google?  They have brought the CPM model to the table with banner ads.  They have search integration with their API for Adwords which has been taken advantage of by most of the major ad servers already.  All they need to do is step forward and allow ad servers to pump the banner campaigns through.  Now that CPA is here, it would not be much of a bigger step to allow those campaigns to report through as well.

To me it is clear that slowly, as their foothold continues to stretch and they reach further out into more areas of the online advertising arena, they are beginning to recognize that they have to open some doors of the vault just a crack in order to make it a little easier for companies to work with them.  Maybe they will let a little more light into the room, slowly.  Hopefully so.  But the signs of some listening are there.

Reactionary with Insight

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