• Business Week, Thursday, March 22, 2007 11 AM

So Google is moving into the cost-per-action (CPA) business, which means marketers will now only pay for those ads which lead to a specific action, such as a phone call for a service provider, or a sale for a retailer. The new service could be Google's answer to click fraud, which occurs when a business rival deploys an automated program to repeatedly click on a marketer's ad to deplete the company's ad budget. If advertisers are only paying for ads that lead to a sale, there's no sense in sending out click bots, is there?

CPA could also be the next step in Google's bid to stay ahead of its competitors. Indeed, the trial, its second, comes after Yahoo's own belabored upgrade to its search engine, which most analysts said simply makes their service more like Google's. But will a CPA network translate into more revenue for Google? UBS analyst Benjamin Schachter thinks so. A CPA network "allows Google to present advertisers more measurable ROI [return on investment]. This should enable Google to better maximize revenues on its network."

For the time being, Google says it has no plans to deploy CPA on its search engine; the test is for contextual advertising only. It involves 75 Google AdWords advertisers and 75 affiliated AdSense publishers. The parameters for advertisers and publishers have been laid out in several reports, including MediaPost.

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