Google Adwords Launches Pay Per Action Beta Test

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About Milind Mody

Milind is the founder - CEO of eBrandz, a professional SEO company in New York & India. Milind has been featured in various IT related magazines like Digit (Nov 2005) and BenefIT (Sep 2007). Milind also writes articles on Search Marketing in Popular Magazines like "Search Marketing Standard".

Inside Adwords recently posted about the new Pay Per Action model for it’s Adwords advertisers. They are calling advertisers to participate in Pay-Per-Action beta test. The detailed description of the post can be found here.

Rob K. who is the product manager for Pay-Per-Action at Google describes in more detail about the new model. The important thing here to notice is that the new model is not applicable to search network but instead it is only available for content network. Another important thing here to notice is that they have used the word “Publishers choose specific pay-per-action ads“. This means that publishers are given more control about whether or not to select the “Pay-Per-Action” ads. This means that if your cost per acquistion is kept at very low level then most of the publisher may refuse to display your ad on their inventory.

Pay Per Action is a model where you only pay when a visitor takes desired action on your website. As an example let’s say if a bank website gets a lead from it’s contact us form or lead form then it can be considered as an action or conversion. Similarly for an online store if someone purchases online then it can be considered as an action or conversion. So the action can vary from website to website and from industry to industry. It’s more closer to affiliate kind of model where you pay only for actions and not on number of visitors or clicks.

Let’s see the pros and cons of the new AdWords model:

Pros:

1) You pay only for actions and not on number of clicks. So if your AdWords campaign is turning out to be expensive then this is a good model to give it a try.

2) No more worrying about the number of junk clicks you have been getting from content network.

3) Tracking is made simpler by using the Google AdWords conversion code.

4) More encouragement for quality traffic with Pay-Per-Action model.

Cons:

1) The Pay Per Action model is available only for content network. For users using only search network will still have to rely on the regular pay per click model.

2) Publishers have more control. This may or may not be a good thing for advertisers. For certain advertisers who are working on low margins will keep low Pay Per Action price. The publisher will favour higher pay per action ads which means, advertisers with low margins will face difficulty in finding publishers to display their ads.

3) You have to pay fixed price if the desired action takes place on the website. So it is imperative that the fixed amount is selected appropriately. In Pay per click model the bids are adjusted so that you pay only 1 cent higher then your next competitor. So even if you set your maximum CPC (cost per click) to $1 but in reality you may be paying less than $1 per click.

It is a good move from AdWords point of view. The program is limited to only Content network so this will encourage advertisers to use more of Google content network. Since there has been lots of complaint from advertisers in the past for Google’s content network, a lot of advertisers now a days completely turn off their content camapigns and keep their ads running only on Google search network.

Secondly this program encourages competition to pay fixed amount for a particular action. This means publishers will only favour ads with higher cost per acquisition amount. This in turn will compell advertisers to stretch to their maximum to stay in the competition. Maximum fixed amount means more dollars for publishers as well as Google Adwords.

Google is just asking advertisers to participate in beta test. For interested users who wants to participate in this beta test can fill out the following web form here. Even after you fill out the form, Adwords will later send invitations only to few selected advertisers. There are two conditions for beta test. First you must be an advertiser located in USA and you must already have installed the AdWords conversion tracking code on your website.