Is Cost Per Action The Answer?

Predictions

from the is-there-any-one-answer? dept

The idea of “cost per action” advertising, rather than “cost per click” is hardly a new idea. In fact, in many ways, it predates cost-per-click. Affiliate programs are, after all, just cost-per-action advertising. The advertising site doesn’t pay unless someone actually buys something (the action) and then then the publisher who pointed them there gets a cut. However, the concept of cost per action as an alternative to cost per click is about to get more attention thanks Bill Gross’s ability to take me-too ideas and promote them as new. He’s been working on the new Snap.com search engine for a while now, but it’s raised some money, and he’s now trying to position it as the solution to click fraud — since cost per action isn’t as susceptible to click fraud. Snap wasn’t originally launched as a cost-per-action search engine. They only added that feature a few months ago, and have suddenly decided that’s their hook to get attention. Of course, they need to do something to get attention, because at the rate they’re making money today (yes, they do publish how much money they make), they have quite an uphill battle. And, it’s not clear that going cost-per-action is really going to solve that. Affiliate programs have been great for small businesses, but it’s not clear that you can really build a huge home run style business using the same model. Cost per action doesn’t make sense for all advertisers — especially those trying to build up a brand or attract interest in ways that don’t involve a direct purchase (though, you could make the argument that it makes more sense for them, since they’ll never pay out a dime — but that makes it tough for Snap to make any money). Either way, expect to see plenty of stories in the near future about why cost-per-action is better than cost-per-click — and you can bet that Snap’s PR effort is behind most of them.