Google Reinvents Online Advertising – Again

Google announced Tuesday that it plans to enhance its successful online advertising service by offering clients an alternate business model — if an ad does not get results, advertisers do not have to pay for it.

Now, instead of paying per click, advertisers will be able to experiment with paying each time a user takes an action on their Web site, such as filling out a form.

The new model is part of an ongoing effort to provide advertisers and publishers with more value, said Google.

The Old and the New

The new model isn’t intended to replace the current system but rather provide advertisers greater control over their advertising costs, as well as complementing the existing cost-per-click and cost-per-impression pricing models.

The new pay-per-action pricing enables advertisers to reach their customers in a new way, thereby better meeting their goals and objectives, according to Google.

Google said the beta ads would not run on its search results pages, but on its AdSense network of content sites. The AdSense publishers will gain greater control over the ads that run on their sites after they start accepting pay-per-action ads.

Tracking Ad Dollars

After starting a beta test of the new program last year, Google recently expanded its pay-per-action offering to include 75 publishers and 75 advertisers. More will be added on a rolling basis as the test expands.

“The ability for advertisers to pay on a cost-per-action basis should provide them a more effective way to track their ad dollars,” Rob Enderle, an analyst with the Enderle Group, told the E-Commerce Times.

The new model is likely better suited for businesses that sell services rather than products, and are looking for customer leads, Enderle added.

Select Group

The new model, which is limited to a select group of advertisers during the beta-testing period, will be offered for ads displayed on Google’s content network and on Web sites that display ads sold by Google in return for a share of the profits, the company said.

The model may help combat click fraud, which has been rampant in recent years and has advertisers skittish on shelling out big chunks of their budgets for online anything.

“Google is trying to get ahead of the problem with this new model,” said Enderle. “They have been worried that that advertiser are pulling back dollars because they no longer trust the numbers.”