Google announced today a 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. So is Google going after the affiliate market place?, paying per action is normally the way an affiliate generates their income, with Google planning to roll out this in the future some are worried that it could sign the end to affiliate marketing.
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, and hopefully returning a good Return On Investment.
But I am not sure how this will fit in with the content network, as I am sure the aim will still be to earn the most money in CPM terms, so where before we would be happy to pay £0.40 a click and make say a £5 profit, will we be forced to compete and pay £4 per action etc. I guess thats a question that will get answered over time.
For Example :
Lets assume we have an affiliate offer running, and get a very good conv rate of 5 clicks per sale (20% conv) , and each sale being worth £5
10 Clicks @ £0.40 = £4 Genrates 2 sales which makes us £10 returning £6 Profit
vs
10 Clicks @ £0.00 CPC but charged at £4 per action would hit the ROI as we would only make £2 Profit
Pay-per-action ads are only shown on AdSense sites. AdSense publishers are able to choose whether they want to serve pay-per-action ads on their sites.
I’ll blog more when we start getting some real stats, to see how it will affect the affiliate world.
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