Google is experimenting with a new idea. As an advertiser, you only pay if you get the desired results. If not, it’s on the house. According to the company’s remarks, advertisers will only be charged when an advertisement results in the consumer’s taking an action (i.e. buying a product) as opposed to the existing methods of paying based on the number of clicks or number of views.
“We’re optimistic that it will be something that will be very compelling for advertisers,†said Susan Wojcicki, vice president of product management at Google. Ms. Wojcicki said the system would also give participating Web publishers a wider choice of ad types for their sites.
The ‘cost-per-action’ model is more appealing for advertisers since it allows them to choose what kind of action they want to pay for (i.e. download, purchase, subscription), and consequently reduces their risk (since they aren’t billed for ineffective ads).
The New York Times has further commentary.
Originally posted on March 23, 2007 @ 2:41 pm
I think this model ignores the fact that impressions of advertisements on a website do have an impact.
The more exposure you have to an ad the more likely you are to not only remember it, but also click on it, or buy their product or service in the future.
Look at those “Active-On” ads on tv…that do almost nothing other than repeating their products name 3 times….it may be tedious and annoying, but it’s effective…and from what I’ve heard..has actually served them quite well.
Nevertheless this is a very intriguing advertising method…and the Internet advertising model has needed some revisions in my opinion, and this could certainly be a step in the right direction.
It seems to be a good idea. I would be interested, how will track Google the sells?…
This is a great new idea… that Amazon had 11 years ago. Certainly you’ve heard of affiliate programs? ;)