pay per click

http://blog.washingtonpost.com/securityfix/2007/04/virus_writers_taint_google_ad.html

The above article describes a method used by some bad elements of society to install malware on vulnerable pcs as users click on adwords ads. Replies to the thread tend to point out the vulnerabilities of Internet Explorer Browser as the main culprit in the issue. In effect, the ads would point to a virus which would attempt to install on the users pc & then quickly redirect to the advertised site. Targeted keywords for the ads included well known institutions such as the BBB.

Today Google announced a Pay Per Action beta test destined for their adsense contextual advertising product. In essence, PPA does not incur a cost to the advertiser unless the visitor takes an "action". This could include a purchase or completing a form.

Needless to say, this has lots of Search Engine Marketers, Publishers, & Affiliates buzzing about what it means to the industries.

Nothing... yet.

However, it could become significant in a number of ways.

Some see an opportunity for smaller advertisers to begin advertising online as they would not have the risk of click fraud. Advertisers could determine what their profit per visitor is & then bid a percentage of that profit for a PPA advertisement. It's measurable.

Assuming PPA grows beyond the content network into the search network, the advantage over PPC still eludes me, though. Search engine marketers do this all day, every day with CPC (cost per click). The really scientific ones could tell you conversion rates & revenue per visitor by keyword & time of day. Most of the time this can be done without surrendering conversion rates to a third party like Google.

PPA requires conversion tracking in order to count an "action" (and charge the advertiser). Congratulations. Now another company has almost as much information about your online business as you do... and the resources better analyze the data.

While the PPA Advertising option is in beta & limited to the contextual network, I wouldn't bet on it staying there. If there is any indication that Google can increase profitability by expanding this, it will be scaled. Increase profitability... that's a clue.

Companies spend money to make money. The enhancements that Google has offered with Conversion Tracking, Web Analytics, etc. are given away for FREE (!) despite their development & maintenance costs. The true cost to advertisers is data. Nothing is free.

Some say this is the end for the Affiliate networks & aggregators or even the end of CPC - probably not... but truly it's too early to know if or how this will be adopted.

In the interim, I'm staying on the sidelines & building Content.

Google Adwords just released a Beta program for CPC ads on Site Targeted campaigns.

We just launched a test ad on a site with 500k+ impressions per day to try it out under fire. Look forward to a full review when we have some actual data.

Adwords has been available for site targeted campaigns for some time (...since 2003?). However, the site targeted model was based on CPM impressions as opposed to cost per click.

Site targeting can be effective if:

A) You have a product everyone needs

or

B) The site is a good fit for your niche or demographic.

Let's see how it goes ;)

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Ok here's the update. Wasted money.

It took a while for the ad to go live & we targeted a product that every adult driver needs & is mandated by law (clue.)

When the ads did start running - the budget was used up quickly. After about 100 visitors no conversions. In fact, none even ventured past the landing page.

Now I remember why we don't use the content network.

Your mileage may vary.

Eric

There is a quote on ThoughtShapers.com from Craig Swerdloff which questions the lifetime value of a customer driven by paid search vs other channels. To summarize, customers gained through paid search tend to be deal seekers & less loyal to a particular site or merchant than they are to the next deal.

The full post is on Craig's blog.

I tend to agree in regard to the lesser degree of loyalty in the case of deal seekers (on average), but this leads to a different question.

What if we, as publishers, sought to provide a solution or answer a question for the user as opposed to simply trying to sell them something? Is a customer gained because we solved their problem more loyal than one which converted due to effective marketing techniques.

Many well crafted sites do a nice job of converting the visitor into a customer... once in a row. What if the primary goal were to educate the visitor with conversions as a secondary thought. Does the drive for conversions through hard sell conflict with the goal of building loyal visitors?

There is something to this... particularly as it relates to Pay Per Click. On average, Pay Per Click costs will continue to rise. As more money moves from offline advertising budgets to online advertising, it is inevitable. To borrow a concept from physics, two ads can't occupy the same space at the same time. Someone is going to have to step up their game... or (more likely) their bids.

As pay per click costs rise & squeeze margins, those who have worked to build repeat business will have an advantage. They already do.