WSJ quotes senior product manager Baljeet Singh as saying, users would be able to skip pre-roll ads, that advertisers wouldn’t be charged for skipped ads, and that Google’s "been playing around with it for the last three quarters and seeing really great results." He reportedly said that this would encourage advertisers to invest in compelling ads.

Meanwhile, Google is also testing more cost-per-action strategies. Pete Barlas with Investor’s Business Daily says the company has stepped up testing in this area over the last six months.

He quotes a Google spokesperson as saying, "As we are currently in the process of collecting and analyzing data from this ongoing beta, we don’t have any metrics or much more to share on this topic at the moment."

Meanwhile, Google has certainly been making plenty of refinements to its cash cow, AdWords. This week, Google launched new Goals options, and has recently added the " Analyze Competition " feature to the opportunities tab. They also launched a new click-to-call from Apps format, announced the Google Display Network, some changes to reporting, and the availability of sitelinks in all AdWords campaigns.

"We launched Conversion Optimizer in 2007 as a tool to improve your campaign ROI," says Emily Williams of Google’s InsideAdWords crew. "Conversion Optimizer analyzes your conversion tracking data and automatically adjusts your bids for each auction. Over the past few years, we’ve been pleased to hear from a number of you that you’ve seen significant ROI improvements after implementing Conversion Optimizer. In fact, analysis indicates that, on average, those of you who use the tool experience a 21% increase in conversions along with a 14% decrease in CPA."

That analysis is based on Conversion Optimizer campaign performance over a year’s time, with a control set of campaigns.

"This latest update to Conversion Optimizer was made in response to your feedback," says Williams. "We’ve heard from many of you that you’re more accustomed to thinking in terms of a target or average CPA when it comes to managing your online advertising (as opposed to the Max CPA bids which the tool has historically required). We hope that having the additional Target CPA bidding option will make it even easier for you to boost your AdWords ROI."

To use the new Target CPA bidding feature, advertisers can go to the settings tab in their account, and go to "Focus on Conversions". From there, just click Advanced Options. Conversion Optimizer itself is only available for campaigns using conversion tracking, and have received at least 15 conversions over the last 30 days.

Essentially, the program will now run on a cost-per-click basis, as opposed to a cost-per-action one. Affiliates can get paid for sending quality traffic to eBay, even if that traffic isn’t making purchases.

"The price paid per click will still depend on the short-term and long-term revenue of the traffic that the publisher drives to eBay, but will now also take into account the incremental value of that traffic to eBay, i.e., whether a sale happened as a direct result of the publisher’s actions," explains Steve Hartman of the eBay Partner Network. "The greater the incremental revenue and the higher the expected lifetime value of the customers an affiliate sends, the higher the EPC and total earnings the affiliate will receive.  Earnings Per Click (EPC) will be set daily for the previous day’s traffic."

eBay says Quality Click Pricing will simplify the commission structure, and that the payout will be more closely aligned with traffic quality. In addition, the company says publishers will be rewarded for "multiple sources of value in addition to sales." This includes revenue from advertising on eBay pages and PayPal transaction revenue.

eBay’s new model for its affiliate program will take effect for new members beginning September 1st, and for existing members October 1st. There is an FAQ (pdf) document available on the subject.

"It doesn’t matter how many clicks you have if it doesn’t convert," said Michael Schoen, Vice President and General Manager of Advertising Platforms at LookSmart. "While other platforms only offer even ad rotation or optimization by click-through rate (CTR), LookSmart’s SmartRotation analyzes conversion rates and serves the best-converting ad creative, giving advertisers a better rate of return on their search investment."

Schoen actually talked about SmartRotation with WebProNews at ad:tech earlier this year, back when SmartRotation was still in limited beta testing:

More WebProNews Videos

Some things to note about SmartRotation:

- Automatically serves the ad creative with the best CPA in a campaign

- Provides detailed information about which keywords and traffic sources are performing

- Easy to integrate into online campaign management

- Built on LookSmart’s AdCenter platform

LookSmart’s distribution network sees over a billion queries a day. The company says SmartRotation allows advertisers to optimize campaigns by conversion events like sales, sign-ups, downloads, and registrations to drive higher performance.

At least Harvard’s Ben Edelman is thorough in his analysis of three different kinds of cost-per-action fraud, all of which involve a different form of cookie stuffing—making it appear links have been followed when they haven’t. Detecting the practice isn’t exactly rewarding though, and Edelman’s analysis is a bit anticlimactic.

Previously on the Internet, the big topic was PPC fraud, also known as click fraud, where bots or teams of clickers would go out and click on ads in order to obliterate a competitor’s search ad budget and move up their own ads. A couple of settled lawsuits and some tweaks to the system later, cost-per-action became the new wave of referral commerce. Instead of just following one link to a webpage, users had to actually do something—like browse the site, click a specific link on the site, or buy something—in order for referrers and affiliates to grab commissions.

What seems like a simple and readily adoptable solution, though, was an invitation to craftier gamers to make it only appear to retailers users had completed desired actions. This is where cookie stuffing comes in. When consumers visit a specific affiliate site, or load an affiliate banner, just as examples, the affiliate sends also a small iframe of 0 height and width (so the user doesn’t see it at all) which embeds a cookie onto the consumer’s browser that will make the affiliate appear to be the direct referral if and when the user actually visits the target site, usually a larger retailer, like Amazon.

This works because most retailers have an agreement with affiliates that if the desired action occurs within a certain time frame (called a “return-days period), then the retailer sends along the commission. This allows affiliates to cash in on an eventuality without being the direct referral.

Edelman does provide specific examples, and things get a little exciting when he posts actual names and addresses of people who appear to be engaging in these sneaky practices. But there doesn’t seem to be much incentive to nip it, though. In addition to the highly technical and difficult process of identifying the practice of cookie-stuffing, Edelman notes there is little affiliate incentive to do anything about it.

“For some merchants and networks, mixed incentives further hinder efforts to prevent these fraudulent practices. In the short run, affiliate networks and merchants’ in-house affiliate marketing staff stand to lose from rigorous enforcement — reducing their commissionable base, reducing the size of their marketing programs, and distracting their attention from activities that more directly increase their respective short-run compensation. Thus, in the short run, both groups may perceive that they can increase their profits by deemphasizing fraud prevention.”

That is of course, unless merchants start making a stink about paying extra and legitimate affiliates begin caring about affiliate reputations.
 

In the United States, we have heard more murmurings of a shift away from cost per click to a more performance-oriented advertising approach. Such a move makes logical sense; paying for a conversion seems more reasonable than dishing out cash for clicks.

Advertisers could be thinking the same thing, at least in the US. Across the Atlantic, the idea of cost per action (CPA) exists more as a blade of newly sprouted grass than a deep-rooted tree. In our interview with AzoogleAds CMO Mike Sprouse, he noted gaining a foothold in Europe also involves some education for the publishers and advertisers they seek.

It’s a little bit of the classic chicken and egg question. Sprouse said by partnering initially with firms in Europe, Azoogle can work on both parts of the equation at once. One partnership connected Azoogle with AdsMarket, itself a partner of advertising giant McCann Erickson.

Europe holds appeal for a simple reason. They have ad growth to pursue, at a rate that is moving faster than the US market.

A weaker dollar likely makes the prospect of partnering and building Azoogle’s brand and advertiser/publisher base in the Euro area a compelling prospect. Sprouse said the CPA model is “poised for growth across Europe.” If Azoogle can convince its targeted customers of the joys of performance marketing, they might enjoy a portion of that growth as well.

Google’s playing with words again. Most people think of CPA as cost-per-action, but Google did a Microsoft on that and tacked a couple more syllables onto it. Google also calls tags ‘labels’, while 99.9999 percent of the Internet (figure provided by Aether Statistical Service) calls them tags.

Let’s talk about money. Google wants AdWords clients to make more of it. Doing so means taking greater advantage of conversion opportunities, advice for which appears on the Inside AdWords blog.

The tips published here cover a lot of the more frequent questions hitting Google about using Conversion Optimizer with their campaigns. Google needs to see 200 or more conversions track through the campaign on a monthly basis to be eligible, for starters, so it isn’t available for new campaigns.

Some suggestions were about what Conversion Optimizer can’t do. Campaigns using it can’t be modified from the AdWords editor, and it won’t use conversion data from Google Analytics.

The AdWords editor probably has Conversion Optimizer functionality in its future, as Google noted it’s a commonly requested feature.

Google’s biggest tips concern bids when using Conversion Optimizer, something advertisers need to keep squarely in mind:

The Conversion Optimizer works on a maximum CPA, not an average CPA. While we aim to avoid any conversion that costs more than your maximum CPA bid, changes in your conversion rate may cause your average CPA to exceed your maximum CPA.

Keep in mind that if you choose a CPA lower than the recommended maximum CPA bid, you are likely to get less traffic than you did with your old CPC bids. It’s a good idea to start with this recommendation and adjust based on the results you observe.

More tips may be found from the webinars Google conducts on the Conversion Optimizer feature.

With the assistance of one of his fellow authors Aaron, formulates an interesting point of view and one I believe cannot be faulted. He notes that the big three search engines have all recently purchased their own advertising networks and the potential for “insider data trading” could exist. Not that anyone believes the big three would go that route, but he notes a CPA model would eliminate the largest concerns marketers would have, should that ever unknowingly happen.

Aaron then goes on to nicely cover why CPA would be positive for marketers, consumers, and search engines. This is the real value of the article in my mind. I am not convinced the industry at large would ever make such a sweeping change, but really explaining the benefits of CPA may help lead media purchasers to consider CPA options as part of their paid search purchasing mix and this I believe is a good thing.

Aaron concludes his article with a compelling argument as to which trends point to a real possibility that CPA could become the standard for paid search. But even he states that he clearly only touches on the benefits of the move to a CPA model and he hasn’t touched on the downsides.

I believe this is one those articles that benefits the search marketing community because hopefully it will generate a larger conversation and encourage many marketers to consider the CPA format as part of their paid search strategy. What do you think about a move away from CPC to CPA? Does it have merit in your mind?

Comments

Hellman & Friedman certainly had the money to afford a boost to Adchemy, after Google put $3.1 billion on the table to buy DoubleClick.

While that large-scale deal has Google squabbling with Europe and privacy advocates, Adchemy has been going on about its business.

The company wants to capitalize on what it sees as a move to CPA models in advertising. In CPA, advertisers pay when a customer converts by performing an agreed-upon action, like making a purchase or filling out a request for more information.

“As the economics of online advertising move from a cost per impression or cost-per-click to a cost-per-action model, marketing departments transform from cost centers into revenue hubs,” Murthy Nukala, founder and chief executive officer of Adchemy, said in a statement. “This is a profound shift.”

Adchemy expects to launch a new product this spring. It will join the existing Adchemy Actions that is being used by their online education and finance customers. “We don’t use incentive-based marketing, co-registration, or loosely controlled affiliate networks,” the company noted in regards to how they get results.

]]> http://www.webpronews.com/cost-per-action-adchemy-scores-19m-funding-2008-01/feed 2 http://www.webpronews.com/pepperjams-new-affiliate-cpa-network-2008-01 http://www.webpronews.com/pepperjams-new-affiliate-cpa-network-2008-01#comments Wed, 16 Jan 2008 17:08:35 +0000 Andrew Wee http://www.webpronews.com/?p=43430 You’ve probably seen quite a bit of coverage for the newly launched Pepperjam Network (PJN for short) a new affiliate /CPA network launched by Pepperjam, a full service internet marketing agency.

Will you bring your affiliate income to the next level by promoting PJN affiliate programs?