Today, everybody seems to be talking about Google’s experiment with pay-per-action or cost-per-action advertising (Others, like Turn, are also doing this). Basically, an advertiser would only pay Google if a user clicked on an ad and also performed some pre-determined action on the advertiser’s site (buy a product, register, etc.). There are a lot of arguments in favor of this, including reducing click fraud, since the advertiser will not have to pay for all the fraudulent clicks on their ad.
This makes me a little wary, only because it’s starting to remind me of the beginning of the online advertising craze. Back in the mid-90s when all we had was the simple rectangular banner, everyone got so excited about the ability to click on an ad and be transported to the store, that they started ignoring the other effects of advertising, i.e., getting inside people’s heads even if it doesn’t involve immediate action. So, for a few years, all anyone cared about were clickthroughs. And when those clickthroughs went downhill (because people stopped clicking on ads), they all started to talk about the death of online advertising. Fortunately, others remembered that advertising is not all about direct response but about things like branding. And online advertising started to flourish again.
What we shouldn’t forget as we talk about PPA models, like the one tested by Google, is that for rich media advertising the PPA model doesn’t work. Users don’t click much on rich media ads because they appear on publisher websites where they go to consume information. For example, when I am at the NY Times website, I want to read the articles, not click on an ad and be taken somewhere else. So, what matters most for rich media ads is how much they change customer beliefs and attitudes. It’s not whether users click on them and then buy or register at the site they go to.
It’s ok to be excited about the prospect of PPA advertising but only if we are talking about sponsored search ads. After all, they most often appear after a keyword search at a search engine, when a user wants to click on a link to go somewhere else and do things like buy, register, and so on.
