Bill Gross, the man who brought pay-per-click advertising to Google and Yahoo, has started a new search engine that will sell text ads marketers pay for only when customers buy. With Snap, advertisers
bid against each other on what they would be willing to pay if a customer completes a certain action--like buying a product or registering at a Web site. They pay only for these conversions. For some
advertisers, PPC ad returns have been diminishing, so a new scheme like this will be welcome. It will certainly be interesting to see how a search market based on conversions settles. Can the engine
earn enough money without Google or Yahoo-like traffic? As one marketer pointed out, consumers "very rarely go to the search engine to purchase." He later added that about one user in 50 actually
converts to a sale after making a query. Google's Eric Schmidt predicted recently that the cost for search marketing at the big three engines will likely go up as a result of this latest round of ad
system overhaul. Add to that the rising cost for agency and technical support, and SEM could be looking at a significantly more expensive and complicated future. Perhaps Snap will shake things up.
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