Kim Malone, Director of AdSense for Google, highlighted the second morning session with her explanation of a new pricing model from Google. Beginning sometime late this year Google will unveil a new Cost Per Action (CPA) pricing model that will charge advertisers when a defined action is taken.
Previously advertisers had two options, Cost Per Impression (CPM) and Cost Per Click (CPC). CPM advertisers pay based on the amount of people that view the page that the ad is presented on. This type of ad is best used for large companies looking to build brand awareness. As the demand for more measurable results and accountability built, Google and others began offering CPC advertising in which the ad needed to be clicked in order to incur a charge. CPA is the logical evolution of this, as the advertisement must drive a specific action such as purchasing an item, in order to create a charge.
Malone described the steps of CPA:
- Advertisers set the CPA for a specific action such as an item sale.
- Website owners then choose to feature this ad on their site.
- User clicks through on an ad and completes required action.
- Website owner is then paid.
Site owners will be able to add these advertisements by selecting a broad category of ads or by drilling down to a more specific category for their site.
It also sounds like Google will be adding to its options for ad format. Currently their ads can be served in text, display, and video format, but Malone hinted that there's "more coming." Guesses, I'm sure, will be all over the internet, but Malone offered a clue. When asked about targeted video advertisements within online videos, Malone responded, "All I can say is, 'Watch this space.' I'll get shot if I say anything more."
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