Google Tests Cost-Per-Action Ads

Search giant Google has launched another limited beta of pay-per-action advertising--a model that allows advertisers to pay for a specific consumer activity, like signing up for a newsletter or making a purchase.

The cost-per-action ads will appear only on the AdSense publisher network. Partner publishers are allowed to choose whether they want CPA ads to appear on their sites. Over the next few weeks, Google will begin inviting publishers and advertisers to participate, a spokesman for the search giant said.

Google first began testing pay-per-action ads in June 2006. During that test, the CPA ads did not compete with regular AdSense ads. They were displayed on a different network, dubbed the Content Referral Network.

According to Greg Sterling, principal for Sterling Marketing Intelligence, CPA ads offer publishers a lower-volume, higher-cost option on their AdSense ads. "While there will likely be fewer "actions," the revenue realized per event will probably be greater--and much greater in some cases," he said. "Publishers have a great deal of choice in the program and will know exactly how much they'll make on any given lead or action originating from their sites."

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Sterling said that advertisers were very likely to embrace the program, too.

"It will be interesting to see how both advertisers and publishers respond, and whether both sides embrace the program almost uniformly. I would imagine that advertisers would," he said. "Google is offering PPA in new ad inventory that complements traditional AdSense, so publishers in the near term won't lose any click revenue as they test the performance of the new program."

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