Off On Vacation

Hmmm . . . not sure how you can be both "off" and "on" vacation, but anyway . . .

Tuesday my family and I are leaving the U.K. for 2 weeks back in Northern California, visiting friends, family and all of our favorite haunts and taking in as many Mexican restaurants as possible en route!

I may have time for an odd post while we're away . . . but on the other hand, I may not!

Google PPA Ads: Perhaps the Biggest Pro of All

Yesterday I wrote about the Pros and Cons of Google's new PPA (Price-Per-Action) pricing model for AdWords, which is currently undergoing beta testing. However, I neglected to mention what may possibly be the biggest pro of all for PPA advertising, as compared to the standard Cost-Per-Click (CPC) model: negating the click fraud problem.

Click Fraud and PPA Advertising

Probably the single biggest drawback of CPC (aka PPC) advertising is the issue of click fraud. This serious problem has resulted in lawsuits involving both Google and Yahoo and various studies have estimated that fraudulent clicks make up between approximately 14-30% of all CPC advertising clicks. Those figures make it clear that click fraud is a significant hidden cost for advertisers.

This really is where PPA advertising comes into its own. Because under the PPA model, advertisers only pay when a predefined action occurs, it makes no difference whether the clicks on the ads are genuine or not, because the advertiser does not have to pay for them. Thus, for any action that involves a financial transaction that is beneficial to the advertiser, the effect of click fraud is, to all intents and purposes, eliminated.

Click Fraud and Non-Financial Transactions
However, PPA advertising doesn't entirely do away with the click fraud problem, though it certainly does reduce it drastically. This is because not all actions for which advertisers are prepared to pay will necessarily produce a financial benefit to the advertiser. If the predefined action involves no cost to the "customer," click fraud may still occur.

For example, suppose I want to advertiser my site so that visitors will subscribe to my free weekly email newsletter, on the basis that x% of subscribers end up making a purchase of a product or service advertised in the newsletter. In this case, the predefined action would simply be completing an online registration form, an action that costs the subscriber nothing. In this case, if someone clicks on my ad in a fraudulent manner and then registers for my newsletter, with no intent of ever even reading it, I will have paid for that action with no actual benefit to myself.

However, the vast majority of desired actions will be ones involving financial transactions, so even this scenario is of limited concern.

Conclusion & Reaction

PPA advertising is certainly a big gun in the aresenal against click fraud and has, for that reason, an obvious appeal to online advertisers. However, even this new pricing model is not without its critics. For example, in a recent post entitled "Is Google doing advertising evil with new model?," Donna Bogatin of ZDNet's Digital Markets blog, examines the questions "Is Google compromising the integrity of the advertising it serves? Is Google now doing advertising evil?"

Sources

1. Click Fraud - Our Research, MarketingExperiments.com (2005)
2. Industry Click Fraud Rate Climbs to Year’s Highest Level at 14.2 Percent, ClickForensics.com (2007)
3. Study: Click fraud could threaten pay-per-click model, CNet News.com (2006)
4. Web of deceit hides behind Google's success, GulfNews.com (2007)
5. Is Google doing advertising evil with new model?, Donna Bogatin, ZDNet (2007)
   

Tags: adwords, ppa

Google PPA Ads: Pros and Cons

Yesterday I blogged about the pros and cons of Google's PPA ads from the ad publishers' persepctive on my MoneyTies blog. Today I want to look at the pros and cons from the perspective of the AdWords advertiser.

Introducing Google PPA Ads

But first, a brief word of introduction about this new advertising model.

In a press release on Tuesday of this week, Google announced a limited beta test of its new Pay-Per-Action ads. This new pricing model is initially available only to U.S. advertisers. PPA ads will be shown on the AdWords' Content Network.

Under the PPA pricing model, advertisers only pay when the customer completes some predefined action on their web sites, such as completing a sales transaction, registering for an online course, etc. It is also the advertiser who determines the values of these actions.

In addition to this new form of AdWords advertising, Google is also taking this opportunity to introduce a new type of advertisement: text link ads. This is in addition to the standard text and image ads, which are also available to PPA advertisers.

So, what are the pros and cons of this new form of AdWords advertising for you, the advertiser?

Pros

Greater Cost Control
Under the PPA pricing model, advertisers only pay when a desired action occurs. Futhermore, the value of the action is determined by the advertiser. This gives advertisers much more control over their advertising costs. In addition, this model provides a solution for one of the most common complaints of the existing pricing options (CPC and CPM), particularly CPC. That is, that advertisers have to pay even if no customers ever buy what the advertiser is selling.

Ease of Cost Management
As well as greater control of costs, the advertiser also knows in advance what the profit per conversion will be because it has already been predetermined in setting the value of the action. Thus, advertisers using this pricing model will not need to continually monitor their ROIs ("Returns On Investment") in the same way that is necessary under the CPC pricing model in particular.

However, it goes without saying that advertisers who have previously used conversion tracking will need to monitor the overall effectiveness of their PPA compaigns as compared to their prior CPC or CPM campaigns as it is possible that these previous campaigns could have produced a better return.

Increased Choice
The introduction of PPA ads increases choice for advertisers in two ways.

First, the very introduction of this new pricing model gives advertisers another means of advertising in addition to the existing CPC and CPM ads.

Second, the introduction of the new text link ad format (with apologies to Text-Link-Ads.com - I sense a potential lawsuit there!) gives advertisers a new and exciting ad format to experiment with.

Cons

Lack of Control
There are three ways in which PPA ads provide advertisers with less control as compared to the standard text or image CPC ads.

Over Web Sites
First, PPA ads will only be made available on the Content Network, that is, as AdSense ads. This means that your ads could end up being shown on any site in the Content Network and the only way you can prevent your ads from being on particular sites would be with the site exclusion tool. However, it is unclear at this time if the site exclusion tool will be available for PPA ads. In fact, given that

AdSense publishers are able to choose whether they want to serve pay-per-action ads on their sites. Publishers can select between an individual ad, a shopping cart of ads, or a specific term or phrase that is relevant to their site’s content . . . publishers [have] control over which pay-per-action ads are shown on their site,

I will not be surprised if PPA advertisers will be unable to prevent their ads from being shown on certain sites. This is certainly the case with comparable advertising platforms for affiliate advertising, such as Clickbank.

In addition, the very fact that these ads will be AdSense ads is a potential source of problems, as I've written about before!

Over Adwords Networks
Second, the fact that PPA ads will only be shown on the Content Network means that advertisers will not have the choice to display their ads either on Google.com or other sites in the Search Network. Google.com and the Search Network are arguably better advertising platforms in most cases but they will not be available to PPA advertisers.

Over Ad Exposure
Third, it is possible that no-one will actually choose to display your particular ads on their web site. The choice to display PPA ads, and which PPA ads to display, is with the AdSense publishers. Thus, even if your ads are relevant to hundreds of AdSense web sites, if the owners of those sites do not choose your ads, you will not be able to advertise using the PPA pricing model at all.

This issue also raises another con of the PPA pricing model . . .

The Problem of Price Setting
There are three elements of the problem of price setting that will affect PPA advertisers.

1. Competing Advertisers
First, the price (aka "value") you set for your actions will be competing against the values set by other, competing advertisers. This, effectively, introduces a pure auction for exposure. However, given that the choice is ultimately with the AdSense publisher, an ad with a lower value may still be chosen over one with a higher value. However, how Google will handle the situation when an advertiser chooses "a specific term or phrase that is relevant to their site’s content," remains to be seen.

2. Competing Demands
Second, the advertiser will also need to balance carefully the competing demands of setting a value that is low enough to produce a reasonable return for each completed action while, at the same time, needing to set a high enough value to attract the AdSense publishers who are, effectively, affiliate advertisers.

3. Competing Pricing Models
Third, advertisers will need to try to determine in advance whether the PPA model will produce a better ROI than the CPC or CPM models. If the advertiser has been using conversion tracking, this should be relatively straightforward. However, it will still be of great importance for PPA advertisers to test the effectiveness of these ads as compared to the CPC and CPM options.

Conclusion

PPA ads are certainly a long-awaited solution to one of the biggest complaints against the CPC pricing model and, even though they give advertisers greater control over their costs this control is not without its own problems. However, I sense a bright future for PPA ads and I shall look on with great interest as the Beta test progresses.

Tags: adwords, ppa

Ads By Google - New Look

I just noticed another interesting variation of the "Ads by Google" text that appears alongside the AdSense ads on this blog:



This variation is quite stylized and fitted quite well with the ads on this blog!

Little-Known AdWords Features: Bid Multiplier

One lesser known feature of AdWords is the ability to automatically have your bid adjusted at different times of the day, as part of the Ad Scheduling functionality. Thus, if you would like to bid less from, for example, midnight until 7:00 a.m., you can do so using the Bid Multiplier.

The Bid Multiplier is available through AdWords' Ad Scheduling functionality. To access this feature, select a campaign and click on "Edit Campaign Settings." Then, depending on whether you've had Ad Scheduling enabled in the past or not, you will need to click on either "Turn on Ad Scheduling" or "Edit Times and Bids." Either of these links will bring up the Ad Scheduling screen.

From the Ad Scheduling screen, in order to access the Bid Multiplier, click on the "Switch to Advanced Mode" link. From this page, whenever you select a time range in which to display your ads you are also given the ability to adjust your default bid by a particular percentage.

Thus, if you wanted to bid only 3/4 the amount of your usual bid between midnight-7:00 a.m. on Wednesday you would first click the "Edit" link by Wednesday. Then select the start and end times from the drop-down time selectors. Finally, enter "75" in the "% of bid" box. This will cause your ads to run at 3/4 their normal bid during those selected ads.


When you have finished entering your schedule, simply click the "Save Changes" button and "voilà!"

You can enter as many of these percentage ranges as you like per week. A great way to control you bidding throughout the day, in peak and off-peak periods.

Tags: adwords

Inconsistent Information from AdWords and AdSense?

Yesterday I was listening to the AdWords Learning Center multimedia lesson on Ad Distribution when I heard something that immediately caused me to sit up and take notice.

In a discussion of the Content Network (aka AdSense), the "lecturer" stated that ads are ranked on the Content Network in the same way as on Google.com. Thus, to put it simply, if my ad ranks above yours for a Google.com search, it should rank above it on the Content Network.

However, if you take a look at AdSense help, you will read:

please know that all eligible ads will compete to be displayed on your pages, and our system will automatically show those that will generate the highest revenue for you.

I believe the official AdSense blog also discussed this topic a while ago, which clearly stated that Google puts the best-paying ads, as far as the AdSense publisher is concerned, first on the page.

Do you see the inconsistency here?

On the AdWords side, we're hearing that ads are ranked according to Bid (max cpc) x Quality Score AND that ads on the content network are ranked in the same way. However, on the AdSense side we're hearing that Google will display the highest paying ads first.

Given that it's possible for an ad with a lower bid to appear above one with a higher bid on a Google.com search results page, as a result of different quality scores, how can this possibly be consistent with AdSense's claim of displaying the highest paying ads first - unless Google pays a higher percentage for a click on the ad with the lower bid/higher quality score than on the one with the higher bid/lower quality score?

The Learning Center lesson also stated that Google stops displaying ads on particular sites that don't produce results for that ad. Thus, there is much more going on here than a simple AdWords "bid x qualty score" auction.

Tags: adwords, adsense