Is Google's CPA Move Bad for Bloggers?

Posted on June 23, 2006

Google AdSense has launched a test of a new ad vehicles that pays publishers using Cost-Per-Action (CPA). The move toward CPA puts Google in competition with affiliate networks like Commission Junction and Linkshare. ZDNet's Googling Google asks if this program launch is a sign Google recognizes the click fraud problems advertisers are facing with CPC programs. A recent Mark Cuban post suggested that click fraud is out of control. While some bloggers are optimistic that Google's new CPA ads could add an additional revenue opportunity others say it could doom the good CPC pay rates some bloggers are now getting -- especially if advertisers starting opting for the CPA program instead of the CPC program. Blog Republic writes that the new program could lower revenues for bloggers and ruin the CPC program.

A move towards CPA (Cost Per Action) ads could deliver a hurting to Adsense publishers. CPA ads are very attractive to advertisers because they lower their cost of acquisition for leads or sales. However, there's a big flaw inherent in this type of set up: it's not always the publishers fault that the end user doesn't convert on the advertiser's end.
In fact, a lousy landing page ensures low conversions, which means publishers will be punished for an inept marketer's miscues.
Worse yet, there's a double sting from this. Not only do you reward crappy marketers for bad landing pages by discounting the price they pay, but you also punish excellent publishers by discounting the amount you pay them for traffic on their website. No way is this the direction Google should take the whole program in. In fact, this could be so bad for publishers that it would be the beginning of the end of most webmaster's best performing revenue maker.

Jeremy Schoemaker writes about how the AdSense referral program for Firefox doesn't pay well. MIT's Advertising Lab also has a post about why CPA advertising programs can be bad for publishers.

The problem with CPA is that it shifts the entire burden of responsibility onto publisher, and it shouldn't. Publishers are responsible and should be awarded for impressions their sites generate (the old-fashioned circulation, if you wish). They share responsibility for click-throughs with "ad agencies" that create the ad; publishers' role is to position the ad unit on a page in the most effective manner. Publishers and "ad agencies" get customers in the door, but it's the job of the shopkeeper to close the deal. Publisher should not be punished for transactions that fail because of the problems on the shopkeeper's end, such as low inventory, confusing store layout or unfriendly service. Look, do you think my ad spread in Cosmopolitan should be free if it fails to move my bling even if my bling is worthless and the distribution system sucks? How many ads have you clicked only to be lead to a page that has nothing to do with the original offer?

Greg Yardley also blogs about some disadvantages for publishers using CPA programs. JenSense has more details about Google's invite-only CPA test.