Google to Test Pay-Per-Action Ads

Google today announced a limited beta test of pay-per-action advertising, a new pricing model for certain AdSense ads on its content network that pits the company squarely against affiliate programs.

Under the new pricing model, advertisers will decide what kind of action they are willing to pay for, such as a sale, newsletter sign-up, or other conversion. The advertiser can set a value for that action that publishers will be paid. Google will monitor the conversions through tracking codes on the advertiser’s site.

Although a pay-per-action model shifts more risk to publishers, since they don’t get paid unless a visitor clicks and completes the pre-defined conversion, the payoff will usually be higher than CPC commissions, said Rob Kniaz, product manager for Google’s ad products.

“It does shift the burden of conversion to the publisher, but it’s a higher value ad unit,” he said. In addition, publishers have more flexibility in encouraging users to take advantage of the offer being presented, by recommending or describing the advertiser’s service, he said.

Google has been testing various forms of these pay-per-action ads since June. Advertisers can sign up now to participate, and Google will begin inviting U.S. advertisers to test the program over the next few weeks.

AdSense publishers can select individual ads, a “shopping cart” of ads, or search for ads by keyword. The new ad units are separate from the CPC and CPM ads Google offers, and must be selected and placed separately. Publishers can review the details of the offer from the advertiser before agreeing to show the ad on their sites.

Advertisers can create text or image ads, or use Google’s new text link ad format to create brief text descriptions that appear in the style of a publisher’s page.