Alert search engine marketers first noticed the announcement of limited testing in late June 2006, but most of us could only wait impatiently and ponder what it meant. Now that Google has opened things up, we can get a better handle on what’s going on. What is it? It’s pay per action, Google’s newest feature for AdWords and AdSense users.
Pay per action isn’t exactly new; search engine Snap has been doing it for quite some time now (though it recently had to change its model). But Google’s involvement in pay per action advertising marks the first time it’s gone this high profile. Or maybe it doesn’t, if you draw parallels to affiliate marketing (more on that in a bit).
For those of you coming a little late to the game, let me define a few online advertising terms. “CPM” is cost per thousand impressions, and is often used to price banner ads and similar items. “CPC” or “PPC” is cost (or pay) per click advertising. Instead of paying for eyeballs, the advertiser pays every time someone clicks on his or her ad. Both forms of advertising are subject to fraud; with PPC advertising, in fact, there’s been a lot of debate surrounding the frequency of “click fraud,” up to and including what kinds of clicks fit the definition. (Neither advertisers nor search engines can read people’s minds, much as they both would like to).
Cost per action (CPA) or pay per action (PPA) is different. Instead of paying for a certain number of impressions or for clicks on ads, advertisers pay every time someone clicks through the ad and completes a particular action. The action can be anything that can be tracked online: signing up for a newsletter, giving some personal information for a sales lead, buying a product, or even some combination of these actions (say $1 if the web surfer fills out a form and $5 if he or she buys something).
This is going to change the online advertising dynamic in a number of ways. It also threatens at least one company’s business model. Let’s take a closer look at what this new option means for advertisers and for publishers.
Search Engine News 
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