Google has finally started a public beta for a pay-per-action ad model. I already explained how important Google sees these types of ads. For text-based advertising, this is where Google will focus its attention next. These types of ads are much harder to cheat because actual actions (such as a purchase) must occur before an ad pays out. This destroys the click fraud industry that has plagued Google. While there is a form of fraud associated with pay-per-action, it is much more difficult to pull off, and relatively easy to spot (My previous employer was this type of ad agency).
As this beta rolls out and the mainstream launch nears, I firmly believe you will see even more active promotion of the Google Checkout application. As I mentioned before, Google checkout is a critical edge in Google maintaining any market share it steals from the current top pay-per-action companies. In short, Google Checkout kills a variety of potential loopholes that exist in the pay-per-action ad model. Since Google controls the payment processing, they can track:
- Valid vs Invalid payments. Sometimes a payment is invalided later, such as when a credit card is reported stolen. These are lost revenues for the publisher since they’ve already paid the ad broker (Google) money to place their ad. The ad broker also gets shafted sometimes because the advertiser would withhold payment, causing problems down the chain with the publisher who displayed the ad. With Google Checkout, such events can be properly tracked and all parties involved can be refunded or credited as necessary.
- Refunds and chargebacks. This is the same issue as above, but involve abusive or fraudulent customers. Again, this is otherwise lost money to the advertiser, which is of course the single most important entity for Google to make happy.
- Actual sales volume, instead of what is reported by the publisher. In regular pay-per-action ads, there is a big incentive to cheat the tracking of sales and conversions (which is done with cookies and embedded images). This is to reduce payments owed to the ad broker. Google Checkout makes this much more difficult since Google knows exactly how much an advertiser has made. There will still be hurdles to overcome, but it definitely will make things more transparent for everybody.
Like I said, Google Checkout isn’t done yet. Google will fight to the bloody end before they let it languish in obscurity. It’s a vital part of their text ad strategy, moving forward.
Gosh, a lot of Google news lately, huh?