Google Tests an Ad Idea: Pay Only for Results

New York Times reports that Google is experimenting with a new proposition for advertisers: if you don’t get results, you don’t pay.

The company said Tuesday that it would expand a test of a system that allows advertisers to pay only when an ad spurs a consumer to take an action, be it purchasing a product, subscribing to a newsletter or signing up to receive a quote from a mortgage broker or car dealer.

The vast majority of advertisers now pay Google when a user clicks on ads that are displayed alongside its search results or on other Web sites, while some are billed based on how many people view the ads.

Under the “cost per action” system, advertisers decide what they are willing to pay for a specific action, like a purchase or a software download. Armed with that information, Web site publishers then choose whether to run a specific ad or group of ads on their sites.

Think of the implications if this type of advertising system were used in the real world.  Companies that advertise on ABC or CBS programs would only have to pay the broadcast companies if their commercials actually generated increased sales, or newspapers could only seek payment from its advertisers only if those ads brought more people to a store’s “blowout” sale. 

Google’s move seems to fly in the face of common business practices.

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One Response to “Google Tests an Ad Idea: Pay Only for Results”

  1. taylormaid Says:

    amen to that brother. right on with your thinking!

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