Gaith  S.

Google announced the testing of a new pay-per-action, or PPA, advertising product ton March 21, this represent a great evaluation on the online advertising model.

 Pay-per-action advertising is a new pricing model that allows you to pay only for completed actions that you define, such as a lead, a sale, or a pageview, after a user has clicked on your ad on a publisher’s site. You’ll define an action, set up conversion tracking, and create ads that publishers in the Google content network can then choose to place in new ad units on their site.

 It is a well know fact that Google controls so much of the online advertising market that just about anything they do in advertising has real consequences around the Internet.

Until now, Google has primarily sold cost-per-click, or CPC ads. Advertisers pay a fee when someone on Google or a Google partner site clicks on the ad and is delivered to a web page designated by the advertiser. Mostly this is contextual ads, where Google place ads according to search key words or key words that are related to the ad or the content of affiliated websites in its Advertisers program adsens. And for advertisers to get an ad placed in a certain key word they have to bed on that key word.

 Advertisers would like PPA because they only pay when a potential customer is in their hands. They don’t like CPC it because of click fraud - publishers and advertiser competitors have an incentive to click those ads and generate revenue (or just cost to the advertiser). Since Google has a short term financial incentive to actually promote click fraud, there’s been a lot of debate around the subject over the years.

PPA advertising is meant to mitigate the risks of click fraud. Now the advertiser pays only if a customer has been delivered to a website and takes a further action, such as buying a product or filling out a web form.

Like CPC ads, PPA advertising wasn’t invented by Google. Search engine Snap has been selling ads this way for some time, for example. Another startup, Turn, is also in this business. As are others.

PPA requires an additional level of complexity in the ad network as well. Previously, Google delivered a user to a website, and sent a bill for the click. Now, Google needs to verify that an “action” has occurred by receiving confirmation back from the advertiser.

The advertiser will of course have an incentive not to confirm the action, but Google will be able to easily adjust for this. Like CPC ads, PPA ads will be ranked by profitability to Google. Google need only calculate the average value of a click to a PPA advertiser, and those ads can then be ranked by profitability. CPC and PPA ads could even be mixed, although Google isn’t doing that yet.

Cost per click –CPA- or PPA deals have much higher payouts than CPC. Thus action fraud will still exist from the publisher side. Just like they clicked to drive up revenue, they will fill out forms to fake actions, thus drive up revenue.  CPA can I think would only work for sites that actually sell something right on their site.

In the Arab world CPC has not grown much mainly do to lack of online advertising awareness by most of advertisers. Those advertisers need to be educated about the values and risk of online advertising, wither targeted banner ads, contextual, CPC, or PPA.

 Google’s PPA product is still until now available in USA market only but soon I expect that it will be available to whole world, in order to for advertisers in the Arab world to benefit from PPA they need to advance their website from merely a product broacher website into in to a corporate portal, where there is dynamic interaction with customers, suppliers and employees, for customer the availability of fill up form, e-commerce. This would be a great branding and CRM feature plus a new sales channel.

 In the Arab world there is around 25 million internet users, untapped mostly by regional advertisers, Arab world Advertisers need specialized help in order to become e-ready and that  is what I a  am working in; starting a e-marketing consultancy firm to help advertisers, exile in the new media world, so wish me luck.