Saturday, July 01, 2006

Pay For Action Adsense – A Fundamental Problem

Ever inventive, Google has been sending out emails to select Adsense publishers regarding a new pay for action program. This is bad news for publishers promoting Adsense.

Pay For Action Adsense – A Fundamental Problem

If you are reading this, you probably know what Adsense is and are using it. If not, it is a program whereby Google allows sites to place ads from the Adwords program on their site. When a visitor to your site clicks one of the ads, you get a cut of the bid price from Google. It is a simple program that surprisingly generates a significant amount of revenue.

Google is now beta testing a new version of Adsense it is calling pay for action. While Google is not providing much information, the program apparently is an attempt to convert Adsense into one giant affiliate program. Instead of paying publishers for clicks on ads, the program will only pay a commission if a person clicks on one of the ads on your site and takes the relevant action on the advertiser’s site. In this case, it appears the action is buying whatever is offered or becoming a lead. In exchange for killing the click revenue aspect of Adsense, you apparently get a cut off the commission for whatever revenue is generated by the advertiser from your traffic.

There are a number of problems with this approach. First, Google offers no explanation of how it will account for sites that list phone numbers for orders, a method used by customers that Google can’t hope to track. Second, Google has offered no indication of how revenues will be generated from sites offering services such as lawyers, doctors and so on. A vast majority of people clicking onto these sites will telephone or email the business, which makes tracking a very difficult game. Admittedly, the program is in beta testing, so Google may come up with solutions for all of these issues. There is, however, a more fundamental problem.

The pay for action program contains one inherent flaw. It eliminates the motivation of the advertiser to have a good, fast site that converts and proper customer service. All indications are the advertisers will be able to use the platform for free and only pay commissions to Google which are split with us, the publishers. If so, what motivation does the advertiser have to improve their site? What motivation does the advertiser have to satisfy customers? In my honest opinion, the answer is very little. Yes, they want to get more sales, but what do they really care if they are getting a bunch of free traffic?

If I told you I would send you 100,000 visitors a day and you had to pay me a commission only on sales, how much would you work to improve the site? Be honest. Perhaps you would work on it for a month or so, but after that human nature would take over. We all know of sites out there that haven’t been touched in years because they have so many affiliates producing tons of traffic that they can just kick back and collect cash.

I fully understand that Google is trying to deal with click fraud, click bots and so on. Perhaps the pay for action program will be the solution when it is ultimately finalized. Perhaps it will be the greatest thing since, well, Google. My experience, however, is that a majority of affiliate programs are iffy at best, otherwise I would be promoting them instead of Adsense!

Again, it is to early to draw any conclusions regarding Google’s move, but people with Adsense ads on their site should take notice. This is a fundamental change that redistributes the risks and benefits of the Adsense program. I bet Yahoo is salivating about the prospects for its Publisher Network if Google goes ahead. Personally, I planned to stay with Adsense for as long as it was offered, but have my doubts now. If I wanted to partner with other sites, I would have done it a long time ago.

Halstatt Pires is with MarketingTitan.com - providing internet marketing services.

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