Google’s Pay-Per-Action: Greatest Invention Since Sliced Bread?

Last week Google broke news of the beta launch for its Pay-Per-Action (or Cost-Per-Action) pricing model.

The new program is available through Google’s AdSense content network and allows advertisers to potentially increase their advertising reach. Advertisers can predetermine what “actions” they are willing to pay for and how much they will pay for a completed action rather than paying per click or impression.

Many critics are acclaiming the new pricing model as a great addition to the search advertising world, but I beg to differ. With this new pricing model addition Google is shifting the traditional role of the search engine.

While search engines are typically lead-providers or site traffic providers, this new PPA model extends the engine’s role up until the point of sale or conversion. This makes Google a type of relationship building business partner rather than a traditional lead provider.

Google may have some kinks to work out and issues to consider with the new PPA model, which goes beyond creating ads, defining conversion actions and waiting for revenue to pour in.

How will PPA prices influence quality score rankings? Since there is no quality score on the content network, and those ads typically have low click-through rates, will PPA rely on price alone for higher positions? If so, this may make the playing field uneven.

Critics are also claiming that PPA will take care of the dreaded click fraud problems. But will the new pricing model pose a new threat of “return fraud” instead? It also seems to me there may be potential issues between the advertiser and Google in agreeing where conversions came from. Everyone knows that even the most advanced tracking technology has some flaws.

Google’s goal is to eventually expand this new pricing model into its successful PPC search network. According to Google’s website, advertisers will be invited into the beta program on a rolling basis over the next few months.

The very business model that made Google successful in mass markets is changing. Google’s self-service and hands-off approach appealed to web marketers across the globe. Only time and testing will tell whether or not the new pricing model will prove to be profitable. I guess we will find out soon enough – Pay-Per-Action could turn out to yield higher returns for the advertiser and publisher, but I still remain skeptical.