On 20th March 2007, Google announced that they were going to test Cost Per Action or Pay Per Action (PPA) ads. The news was greeted with mixed reactions. So what are these ads and how could they benefit you?

CPA ads put Google head-to-head with the affiliate marketing companies. Rather than paying a publisher every time an advert is clicked, the publisher only gets paid if the ad is clicked AND a pre-defined action is taken. The action could be signing up for a newsletter, filling out a survey or buying a product.

Advertisers love this model because they only have to pay when they get the action they want completed. They don't have to pay for visitors who don't complete the required action.

But is this good for publishers? Surely it shifts much more of the risk onto them?

The answer is maybe.

Advertisers will only attract publishers if they offer a much higher commission for a completed action than they do for a click through.

The challenge for publishers is how they encourage their visitors to not only click on these CPA ads, but also take action once they have landed on the advertiser's website.

In my experience, the only way of doing this is to really understand the advertiser's proposition. Once you have understood what they're selling or what action it is they require, you must warm your visitors up before they click on the ad. You have to pre-sell the action you want them to take on the advertiser's site. If they click on the ad knowing what is expected of them when they reach the new site, they are far more likely to complete the action than if they arrive uninformed.

If you don't properly warm them up and they don't take the required action, you will have lost your valuable visitor for nothing.

So going back to the original question – “Are CPA/PPA ads good for publishers?”

I believe they will be, if the commissions are set right and publishers invest the time to understand the advertiser's products and pre-sell the action on their site to increase the conversion rates.

As a publisher, you will always have the choice between being paid-for clicks or actions. Try both and go with whichever works best.