What would happen if the largest online advertising network in the world decided to skip past issues like click fraud by integrating an affiliate style advertising program straight into their already popular network? Apparently, Google is ready to ask that question and everyone else is awaiting the answer.

Phillip Lenssen reports that some AdSense partners are receiving email invitations from Google to participate in a test of a new pay for performance (also known as CPA - cost per action) style advertising system. According to the invitation, the ads will not be sent as part of the existing contextual ad network, they're an entirely new system that site owners can opt into and can separately integrate into their site. In fact, it sounds like site owners can even hand-pick the ads that they'd like to run on their sites.

David Jackson at Seeking Alpha has a copy of the email from Google with more details on the program. The email notes that the program is currently open to only those that receive the invite from Google. It goes on to offer some tips on "optimizing" the CPA ads, like selecting ads that are topical to a publisher's site, or that blend well into the existing design. The email notes that the ads are currently running in a separate system than the existing Google AdSense ads and thus, will not compete with CPM and CPC ads for placement.

A few other points of interest:

How can I promote the CPA ad unit?

Since this is a test and these CPA ads are not regular ad units, we are giving you more flexibility in saying things like "I recommend this product” or "Try JetBlue today” next to the CPA ad unit. However, you should still not incite someone to click on the ad, so saying "Click Here” is not ok.

Where do these CPA ads comes from?

The CPA ads come from a limited group of high quality advertisers that are interested in displaying ads on a CPA basis. They pay you whenever a site visitor performs a specified action, such as generating a lead or purchasing a product.

Will I be able to see reports within my account?

When the test begins, you will receive weekly email reports of conversions you have accrued and your total revenue within the CPA test.

Google AdSense already offers up both pay-per-click (PPC) and pay-per-view (CPM style) ads on the existing network and the test run of this new offering doesn't come as a surprise to many within the industry. Both PPC and CPM style ads are vulnerable to fraud, but CPA style ads are pretty clear cut. Since you have to actually make a purchase, or complete some other action online in order to trigger the expense, there's far less risk of site owners or competitors trying to game the system for their own benefit.

That's great news for advertisers, but it's not necessarily great news for content partners. The thing about cost per action style ads is that it takes the "conversion" out of the hands of the site owner. Rather than simply having to deliver eyeballs or even visitors, getting paid means that the advertiser has to hold up their end of the deal. A bad landing page or a bad offer is unlikely to result in a conversion, through no fault of the site that ran the original ad. That may not sit well with some site owners and may leave them feeling a bit skeptical of the new system.

With that in mind, what this offering basically boils down to is an affiliate network. Think ValueClick (Commission Junction) and realize that this is the direction Google is likely heading. It makes sense in a way...take one of the largest existing advertising networks on the Web and open it up to those that are able to run (and profit from) affiliate style sites. The ability to track your affiliate sales right alongside your contextual ads will be pretty tempting to site owners that make their living off of running advertising.

Discuss this article in the Small Business Ideas forum.

June 21, 2006

Jennifer Laycock is the Editor of Search Engine Guide, the Social Media Faculty Chair for MarketMotive and offers small business social media strategy & consulting. Jennifer enjoys the challenge of finding unique and creative ways to connect with consumers without spending a fortune in marketing dollars. Though she now prefers to work with small businesses, Jennifer’s clients have included companies like Verizon, American Greetings and Highlights for Children.

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