Oh Look, Yet Another Attempt At Cost Per Action Advertising

from the haven't-we-seen-this-before? dept

After every media mention of “click fraud” on Google or Yahoo, you always hear someone suggest that “cost per action” advertising is the solution. Google and Yahoo, of course, work on a “cost per click” system, meaning the advertiser pays each time someone clicks on the ad. That’s where clickfraud comes in — since each click costs the advertiser money or makes a publishing partner money. Cost per action, on the other hand, gets rid of that problem by saying the advertiser only pays money if some sort of “action” is taken (usually a purchase, or at the very least filling out a form). The thing is, this isn’t even remotely new. One of the earliest commerce trends online was the idea of the “affiliate program” which really was nothing more than cost per action advertisements. You put up links (ads) for books on Amazon and you only got paid when someone took an action (bought the book). That’s why we tend to be skeptical each time some new company seems to think it’s come up with something new with yet another cost per action advertising model. The latest one is getting lots of attention because it’s run by a former CEO at Altavista, one of the many search engines Google crushed, only to have its remains later (much later) snapped up by Yahoo. As for the claims that this will take on Google by being “different,” remember that Google has been testing its own version of cost per action advertising already anyway. Cost per action advertising certainly makes sense in some cases, but it’s a bad deal for any site if the advertisers just use it for brand building. That is, if they don’t actually encourage the action, but just get their name across for a future purchase, then the advertiser gets to advertise completely for free. That’s great for the advertiser, but raises plenty of questions about how strong the business model is for the site offering such ads.

Rate this comment as insightful
Rate this comment as funny
You have rated this comment as insightful
You have rated this comment as funny
Flag this comment as abusive/trolling/spam
You have flagged this comment
The first word has already been claimed
The last word has already been claimed
Insightful Lightbulb icon Funny Laughing icon Abusive/trolling/spam Flag icon Insightful badge Lightbulb icon Funny badge Laughing icon Comments icon

Comments on “Oh Look, Yet Another Attempt At Cost Per Action Advertising”

Subscribe: RSS Leave a comment
Joel Coehoorn says:

A good solution could be a hybrid system. For example, instead of a flat 10 cents per click charge 2 cents per click plus 25 cents per action. Those prices could be way off, there ought to be a pricing somewhere that will appease both advertisers and google. The key is to make the real money off of the cost per action, and keep the cost per click just high enough to prevent abuse by advertisers, and low enough to entice new business and minimize click fraud.

Maybe I should patent the idea?

Dean says:

Re: Re:

Well you have a year to patent it since you just publicly disclosed it and you can forget about obtaining any international patents you just lost the ability to do that because of this public disclosure. An who cares if it is not obvious that does not seem to matter these days.

But I do agree we tend to think of things as mutually exclusive when combining concepts often leads to a better solution.

Solo says:

But cost per click is so simple, so elegant. You just need a tiny script on your page and a counter. People click and money flows. It’s the equivalent of commercial on TV: someone pays to have it aired, I mute the tv and go to pee. In case of cost per click, I click, decide I don’t want to buy and off I go for my next adventure.

Also, I’m convinced altavista was dead (or at least moribund) long before google was hip. And I don’t think they got crushed, they were fairly deflated.

Anonymous Coward says:

advertising models are sub-optimal but stable...

… and for that reason along we should expect them to stay around. The real question is how long will it be until the customers of advertising find a better business model that is technically feasable.

Personally, I think it will be a few years before some next-generation wunderkind stumbles over a better solution that doesn’t involve the current web-scraping technologies that for better or for worse are getting swamped by ever growing search results.

Add Your Comment

Your email address will not be published. Required fields are marked *

Have a Techdirt Account? Sign in now. Want one? Register here

Comment Options:

Make this the or (get credits or sign in to see balance) what's this?

What's this?

Techdirt community members with Techdirt Credits can spotlight a comment as either the "First Word" or "Last Word" on a particular comment thread. Credits can be purchased at the Techdirt Insider Shop »

Follow Techdirt

Techdirt Daily Newsletter

Techdirt Deals
Techdirt Insider Discord
The latest chatter on the Techdirt Insider Discord channel...