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Google's Got a New Ad Strategy

Sara Goo

Today, Google announced that they are testing out a new ad model called pay-per-action. Advertisers who now sign up with Google to place their tiny text ads on thousands of Web sites (labeled as "Ads by Google" at the bottom, top or margins of the page) currently pay Google for each time someone clicks on their ad. This method, combined with the text ads placed next to search results, have fueled Google's tremendous growth in the Internet advertising world.

What pay per action does is raise the bar of Google's accountability to the advertiser so that the advertiser pays Google only when someone has clicked on that ad and shows a more specific interest in the advertiser's product, by taking an action such as registering on the advertiser's site or signing up for a newsletter.

It may not sound like a huge deal, but industry experts in the pay-per-click advertising world have long called for this kind of ad model because they worry that the current pay-per-click model is susceptible to "click fraud," or the practice of running up an advertiser's bill with Google with lots of fradulent "clicks" by people who have no interest in the ad. Click fraud is a problem for the entire industry of Web firms that use pay-per-click advertising, including Yahoo, Microsoft and

Google has recently tried to become a little more transparent with how they handle click fraud. Earlier this month, Google revealed some numbers on click fraud for the first time that they previously refused to share with the world, for fear that the click fraudsters would somehow use the numbers to their advantage.

In its announcement today, which I received by email, Google said that this p-p-a model is just a test. It's unclear from the email just how many advertisers will be part of the test. Google invites advertisers to sign up voluntarily to try it out.

By Sara Goo  |  March 20, 2007; 4:34 PM ET  | Category:  Sara Goo
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Posted by: one word | March 23, 2007 6:42 PM

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