Google recently launched a new business model called Pay-Per-Action (PPA) for its AdSense products. This model gives up its revenue generating Pay-Per-Click model in favor of a Pay-Per-Action model that could tackle the click-fraud problem associated with the Pay-Per-Click model.
The Pay-Per-Click model was popular with the on-line advertisers because they were charged only if a user clicks on an ad. This was a huge improvement over the traditional banner ads. Now, Google is taking next step by introducing PPA ads where the advertisers pay only when a user takes a specific action on the advertiser’s site, such as purchase a product. I am not sure how this is going to affect Google’s ad revenue model.
Initially I wondered, how is Google going to successfully track actions taken by users on the advertiser’s site. I have never used Google’s AdSense products, but I think Google Conversation Tracking solves this problem for Google.
So the next question is, what will it take to make this model effective? In my opinion, Google will have to be very clever in targeting the right audience with appropriate ads. Google recently introduced a new service called Personalized Search Engine. It could be the PPA model and the personalized search engine are designed to work together. If Google can effectively personalize searches for the user, they can effectively display the right ads to them. Now, that would make the new PPA model successful and very popular.
