Thanks to our friends at 5 Star Affiliates, as well as the folks at the Inside Adwords blog, we now know that Google is now officially starting the beta testing phase of their new CPA (cost per action) pricing model. Rumored to be in the works since last June, this development has the potential to have profound effects for the entire Internet marketing agency.
Before we get ahead of ourselves however, what exactly is CPA pricing? To paraphrase the Inside Adwords blog, CPA pricing is a
“new pricing model that allows you to pay only for completed actions that you define, such as a lead, a sale, or a pageview, after a user has clicked on your ad on a publisher’s site. You’ll define an action, set up conversion tracking, and create ads that publishers in the Google content network can then choose to place in new ad units on their site.”
While CPA pricing’s been on the web as long as the Dancing Hamsters, Google’s foray into this model has the potential to turn the online marketing world on its head. Never before have so many advertisers had the opportunity to tap into a advertising base as large as the Google Search and Content Networks and only pay every time a lead is generated, a sale is made, or some other website conversion happens.
It’s very similar to running an beer ad during the SuperBowl, and only paying for it when someone runs down to the store to pick up a 6-pack.
Advertisers aren’t the only ones who are in store for a big change either. This new CPA model could have far reaching for web publishers, as well as web searchers in general.
Of course, at this point, its important to remember that the product is still in beta, and widespread adoption of CPA pricing is a ways off. Still this development is very promising and worth keeping a very close eye on.