Pay Per Action and “The Age of Results”

MoreVisibility - March 29, 2007

Google’s expanded testing of Pay Per Action (PPA; aka, Cost Per Action/Acquisition or CPA) ushers in the potential for a whole new era of customer-centric search engine marketing. In this new model advertisers only pay (and publishers only profit) when users follow through with a pre-determined action/conversion. This shift from paying by number of impressions or clicks could have huge ramifications for the ways that SEM campaigns are created and managed and the way companies design their sites and landing pages.

The importance of customer-satisfaction in SEM has hit an all-time high with Google’s continued roll out of the Quality Score — where ad and landing page relevance directly impacts minimum CPC (cost per click). As if the increased minimum cpcs for poorly constructed campaigns or results weren’t enough to send advertisers rushing to revamp their landing pages and make channels to conversion shorter, easier, and much more user-friendly, now PPA enters the scene.

PPA is being heralded not only as the possible click fraud killer, but also as a beacon of freedom that will re-energize SEM and allow advertisers to be more creative, more daring, more compelling, and ultimately deliver more value to their customers.

With PPA the SEM paradigm is shifting from sheer traffic to a focus on user experience and an “age of results”. Unlike in CPC where, since every click is costly, campaigns have to be tightly built and monitored to ensure advertising budgets are wisely spent, with PPA the advertising gained from impressions and clicks is “free” so companies have a lot more room to experiment with campaigns, landing pages, etc., without any risk or loss of investment. The potential for customer satisfaction grows exponentially with this new model as campaigns and landing pages will have to take into account the user’s needs in order to maximize their full potential and in order for marketers and publishers to profit from the campaigns. In short, with PPA everyone wins when the customer is satisfied with his/her online experience, so sites, campaigns, and product offerings must be user experience-centric rather than traffic-centric.