March 23, 11:37 am
Is Pay-per-Click advertising going away?
With a relatively new type of Internet advertising known as cost-per-action taking hold, advertisers may start getting a better return from their advertising investment. I suppose the fact that Google is starting to experiment with it means we should expect to see more of it soon.
Does that mean pay-per-click is going away? Probably not for a while.
With pay-per-click, an advertiser pays whenever someone clicks on his or her ad, regardless of whether or not any kind of purchase or action is taken by the visitor.
But with cost-per-action advertising, the advertiser pays only if the visitor takes a specific action, such as signing up for a newsletter, or making an actual purchase.
That sounds like a great deal. Besides, Roger Swall of BoiseOnlineMall.com (mall office) describes how pay-per-click advertising can be dangerous:
For smaller companies, and even for larger ones, pay-per-click is a bit risky. For example, let’s say you’re a business that caters to local clientele, and you budget “x” amount of dollars for pay-per-click. If a competitor sees you have a pay-per-click ad, he might decide to sit there and ‘click, click, click’ until your ad budget has run out—which means you pay for a lot of clicks but get absolutely no business from it.
This illegal activity, known as “click fraud,” is also accomplished by computers programmed to seek out competitor’s ads and click them ad infinitum, again, eating up the competition’s advertising budget (gotta love them puns). Click fraud is a felony offense, and people have gone to jail for it. But, according to Swall, small business acting with under-the-radar techniques are still getting away with it.
Doe pay-per-click work? You bet. One great example is Omaha Steaks, which pays an average of 65 to 75 cents per click to draw in customers. At $410 million in sales per year, it’s not really a small company. But according to Ellen Lee’s article at clickfacts.com, Omaha Steaks “saw its revenue skyrocket 240 percent from 2004 to 2005 thanks to its Google [pay-per-click] ads.”
Two hundred and forty percent in one year? Yes, I’d say it works!
But — if cost-per-action advertisers pay only when a desired action occurs, isn’t that a guaranteed ROI? And doesn’t that mean we’ll be seeing the end of pay-per-click? My guess would be “not yet” (heck, we still have banner ads around, don’t we?).
Until a method arrives that obviously produces a much better bang for the advertising buck, I’ll surmise that pay-per-click will still be used to make sales and introduce companies to new customers for some time to come.
Filed in Technology, Work, Business, Opinion, Management, Sales, Selling, Advertising, Internet
great information. I was wondering how pay per click might be affected by cost-per-action.
Thanks-
briana
I don’t think its going to do that much damage to PPC because you have to look at it from Google’s point of view, years ago when they were doing Banner advertising they were noticing an increasingly lower CTR as more people became more internet savvy and for the past year or two they have also began to see this type of trend with their contexual advertising.
In their eyes they don’t want to loose out as more people become aware that they are making others money for clicking on those ads, so they need to test the waters, cost-per-action is only one of the programs that we will see, soon contextual advertising will be like the old banner advertising and the CTRs will be much lower.
I’m not saying its going to completely stop, banner advertising is still alive today but the fact that times are changing and we all need to evolve as fast as the internet is in order to keep ahead of the game.
This is exactly what I expected to find out after reading the title ay-per-Click advertising going away? - Workplace Excellence - Dan Bobinski talks about Skills for Workplace Excellence. Thanks for informative article
I enjoyed reading your informative article and fully believe that the most important thing for the serious internet marketer to do, especially since we work in such a tremendously dynamic market, is to use a hedging strategy.
By this I simply mean that we should not rely upon any one marketing strategy (PPC or otherwise), but we should instead be flexible enough to meet the challenge of continual change.
As correctly noted, Pay Per Click still works and can work exceedingly well. If you’re interested in additional information on how to conduct a PPC campaign the right way feel free to visit my website: http://www.top-earn-money-programs.com/ppc
It’s good to know Pay-Per-Click is alive and kicking. It’s also good that Pay-Per-Lead, Pay-Per-Play and Pay-Per-Action are coming into their own and giving us marketers more options.
Short term, I don’t think its going to replace PPC advertising - its still a great platform for thousands of advertisers.