It's been a year since Google launched the beta of its Pay-per-Action product for Adwords, so let's revisit the subject, and why it amounts to an attack on affiliate programs. The product is based on a Cost Per Action (CPA) model. This means advertisers are given the choice to pay only when a customer buys their product, or signs for a newsletter, or completes some other desired task from the advertiser's website. Google serves as a broker between publisher and advertiser, and takes a cut of incentives offered.
This differs from a Pay Per Click model, used by many affiliate programs. It's perceived by many advertisers to be a superior model, since they pay only when they get the intended result of the ad. In fact, when Google was asked if it was their intent to offer something to compete with affiliate networks, they sent out Rob Kniaz, Google's advertising product manager, who said, "This is different from the traditional affiliate marketing industry. [It offers more automation, more options, more control" than affiliate networks.
So far, affiliate networks are still going strong, but Google's product hasn't had time to get a footing yet. And there are some networks (such as B4Affiliates) that have built-in controls that will prevent it from being hurt as much as other networks. Still, Google's actions and words amount to a declaration of war against the affiliate networks--whose money it craves so much.
Thursday, July 17, 2008
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