Is the PPC revolution on its way?

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January 24th, 2008 by Click Consult

CPA advertising (aka Cost-Per-Acquisition/Action, Cost-Per-Conversion, Cost-Per-Phone Call, Cost-Per-Sale and Cost-Per-Enquiry) has been called the holy grail of advertising. Rather than paying every time a customer clicks on an ad (as with PPC [Pay-Per-Click] advertising), you only pay when a customer buys something, calls you, completes an enquiry form etc. This would instantly eliminate all waste from the cost of advertising. No more radio and TV ads spamming out a blanket, noise-filled message to the masses in the hope that a small percentage of people will act on it. With CPA advertising, your marketing budget is ONLY depleted when a sale is made.

Moreover, CPA advertising would deal a crippling blow to click fraud. No more unethical back office workers in developing countries who are paid by your rivals to search & click on your PPC ad over and over again, all day long. They could click all day long, but unless they’ve got their credit cards out and bought something, you wouldn’t care. I say it would ‘cripple’ click fraud and not rid the world of it altogether because it is not inconceivable that rivals would complete an enquiry form with false, bogus details to make you pay – the CPA equivalent of click fraud. However, if you set up a facility to verify the personal details of all enquiries and credit card transactions that came through, even this could be overcome.

There is no doubt that if Google, Yahoo! and MSN all moved over to the CPA model (like www.snap.com) tomorrow, the entire global advertising industry would be shaken to its very core. Advertisers would have exactly what they wanted. The marketing industry could conceivably hit a dead-end – what more could you want when you only pay when a sale takes place?

So, why hasn’t it happened? Why aren’t the big search engines busting a gut to replace PPC with CPA? Although Google has rolled out a CPA Content campaign recently (and demand from advertisers far exceeded the supply), the truth of the matter is the big 3 make far too much money from PPC advertising just now. Personally, I have no doubt that all online advertising will one day work on a CPA basis – it’s just a matter of time. Whether it happens sooner or later is down to how much advertisers fight for it.

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