Google Adwords Pay-Per-Action Advertising Problems

With the introduction of the Pay-Per-Action (PPA) advertising model by Google Adwords, it started off sounding all simple and easy: advertisers will only have to set a cost-per-action value to the products (or services) they offer on their websites. It is even better that the advertisers do not have to pay on the per-click basis anymore, but they will only be charged when a sale, a lead or a sign-up has been completed (as what exactly a conversion was pre-defined by the advertisers).

Pay-per-action advertising is a new pricing model that allows advertisers to pay only when specific actions that they define are completed by a user on their site. Rather than paying for clicks or impressions, advertisers can choose to pay when a user makes a purchase, signs up for a newsletter, or completes any other clearly defined action that they choose.

Last week, Pay-Per-Action has been opened to countries outside of the United States. However, there are potential problems with this new model.

Available to Content Targeting only

Pay-Per Action (PPA) ads are only available to Adwords Content targeting at the moment, which believed to be less effective in converting sales comparing to Adwords Search targeting.

Difficult to define cost-per-action value

An advertiser is required to define an action for any PPA campaign. An action can only be one of the 3 types: Signup, Lead or Purchase/Sale.

Also, the cost-per-action value (which must be a fixed value) needs to be defined, which is the amount the advertiser is willing to pay for a single conversion. Very often on a website, there are multiple products (or services) available in which each can have a different price. This can become difficult for the advertiser to decide the cost-per-action value.

Low click volume

There have been not enough or very low impressions (or exposure) across PPA ads, which directly contributed to the low traffic (click) volume. With such low traffic volume, it may not be any good motivation for advertisers to make use of it.

Purchase fraud

The CPA (or PPA) model has high risk to fraud as explained here.

Available to limited Adwords advertisers

Currently, PPA has only been made eligible to Google advertisers who have been using Adwords Conversion Tracking and they must meet the requirement of high number of total conversions.

Advertisers who use AdWords conversion tracking and receive more than 500 conversions from their cost-per-click (CPC) or cost-per-thousand impressions (CPM) campaigns in the most recent 30-day period will be invited to join this beta test, on a rolling basis. Eligible advertisers will see an alert in their AdWords account informing them that they can now try the PPA beta.

Comments

3 Responses to “Google Adwords Pay-Per-Action Advertising Problems”

  1. PPC Guy on July 2nd, 2007 10:28 pm

    I agree with you that the traffic volume is low, I’ve been involved in the beta for a few months now and I have only received a handful of clicks. It seems that advertisers are reluctant to move from a CPM or PPC model to a PPA model. On the bright side, Impressions on my ads have jumped up since Google’s official release.

  2. Gordon Choi on August 5th, 2007 6:20 pm

    That’s great for you!

  3. The Adventures of PPC Hero - Heroic Feats of Pay Per Click Management : 5 Things to Consider When Running a Google AdWords Pay Per Action Campaign on November 21st, 2007 9:09 pm

    [...] to the new PPA system. Google is still tweaking their infrastructure as they continue to receive feedback from advertisers. What I’m trying to get at is, Pay-Per-Action is in a BETA test and should [...]

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