Wednesday, March 21, 2007

Pay Per Action

As reported in Techcrunch this morning, Google's Pay Per Action engine is no longer a myth. It's a great thing for an industry that is plagued with click fraud, but it also drives more power into Google as other affiliate marketing programs will likely be raided. Further, Google is allowing ads to appear in line with blogs. As from Google's blog, :"These Javascript-based ads will display like regular hyperlinks and allow publishers to embed these links inline with other text to promote your product or service."

So Pay per Action huh? I think its good news for advertisers out there. Of course, each action will be more expensive than a click but now you are basically sharing your margin with Google. Affiliate marketing essentially. No click fraud. It's win /win for both. Will it put a dent into Google's treasure chest? I think in the short term it will. But as more advertisers realize that this model provides them with incremental revenue that they wouldn't have received anyway, more advertisers will sign up growing Google even larger. You know who loses here? Small affiliate players and to some extent SEM firms that work on optimizing your ad for maximum click through.

Now the second point. How are these inline ads going to change the blogosphere?
Sounds like a conflict of interest to me. Remember the controversy regarding Pay per Post where bloggers got paid to tout products. While the company advises a disclosure, I don't think its required. Is Google going to have some type of disclosure policy? Although the text links will say Ads by Google most people probably won't see this as they are already clicking on the link. And will it be annoying? Google says that the ads will appear on Mouseover, which probably means more Ajax and more pages cached and more and more memory needed.

All in all today's announcement by Google will change the way we as advertisers and as consumers utilize the Internet.

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