Google's New Ad Format

Learn how advertisers and publishers can benefit from Google's new advertising model that aims to turn ads into action.

By Derek Gehl

Opinions expressed by Entrepreneur contributors are their own.

Whether you buy pay-per-click ads or get paid to place them on your website, Google is beta testing an ad format that might change the way you do business. It's called pay-per-action or cost-per-action. The stakes are bigger, but at first glance it looks like the odds are better too.

What's Different?
Instead of the regular pay-per-click model, in which advertisers pay every time someone clicks on their ad, pay-per-action charges only when someone takes a certain action after they've clicked through from an ad. The advertiser defines the action--a purchase, newsletter subscription, page view--and the price.

These ads cost more than pay-per-click. It's a lot tougher to get site visitors to buy or sign up than to click through to a website, so the people who publish the ads on their sites aren't going to see as much action in terms of revenue. And considering the ad publishers choose which ads they'll use, advertisers have to make the rewards worthwhile.

There are three ad formats: text ads, image ads and text links, a new format from Google that looks like a regular hyperlink. All of these can be integrated into a publisher's site, and publishers can also promote the ads.

Because the action might not directly follow the click-through, results take longer. Google uses cookies to track visitors who've clicked but not yet performed the specified action.

It's close to the affiliate model that giants like Yahoo! and Commission Junction already use. Whatever you call it, Google's pay-per-action will give AdWords advertisers and AdSense publishers new flexibility.

Making It Work for Advertisers
Let's say you're selling a revolutionary new coffee filter that turns the cheapest beans into a mellow, full-bodied brew, and you want to try out pay-per-action ads. You decide the action you'll specify is a purchase. If somebody clicks through from an ad and buys your filter, you'll pay a commission to the site where the ad is posted.

But before you sell your filter to any actual customers, you'll need to sell ad publishers on running your ad. You'll have to try to attract people who run high-quality sites that appeal to coffee lovers who are serious about improving the taste of their java.

Google gives ad publishers two ways to find ads that best match their sites: They can search using keywords or they can browse categories. So once you create your ad, tag it with search terms and associated phrases so the publishers you're trying to reach can find it. When they find your listing, publishers can look at your ads, learn about your company, and see what kind of action you want taken and how much you'll pay every time that happens.

The listing can also link to a URL--and this is where you can work your selling magic. Create a landing page packed with information about your product and why running your ad will make money for your ideal publisher. You can even take it one step further by doing what top affiliate programs do: help with the promotion.

Suggest some ways they can integrate the ad with their copy, or give them some testimonials or calls to action they can place around the ad, like "This coffee filter makes every bean better! Try it out." When you show that you're making an effort to help publishers, they'll be a lot more interested in running your ad.

Of course, how much you're offering will be the biggest question. Do your math. You have to know how much that purchase is worth to you and how much you can pay to promote it and still make a profit. And you can test which ads are converting best by running the Google AdWords conversion tracking feature, which you'll find under the "campaign management" tab.

Google's pay-per-action program is still in beta testing and only available in the United States. But they're adding new advertisers by invitation. If you already have an AdWords account, you can sign up here .

Making It Work for Publishers
Google is also inviting participants on the publishing side. Invitations are restricted to U.S. sites that publish AdSense ads. Ad publishers who are accepted can run both the regular PPC ads and the new pay-per-action ones on the same site.

Before you sign up, ask yourself, can my site deliver the kind of people who are ready to buy or sign up for something? If visitors come to your site to be entertained or socialize, you're probably better off with pay-per-click.

And do you want your visitors clicking away from your site to go through someone else's sales process? If that's going to interfere with your own sales, then it's probably not worth it.

You can let Google choose the ads you'll run, or you can see what's available and pick those you think will convert best. You might as well test both ways.

When you look for pay-per-action ads to run on your site, find the ones that use your best keywords and speak directly to the needs of your visitors. Ask yourself if you'd be compelled to click on the ad.

One huge advantage to this program is you can merge ads visually into your site, which has been shown to improve ad performance. You can also put a recommendation next to an ad or embed a text link in your site copy. If your site visitors already trust you, they're more likely to follow up on a product you stand by.

Google is sending e-mail revenue reports weekly to those in the program. Actual conversions on these ads can take time, so you might not see revenue right off the bat, or you might lose a commission because someone wiped out their cookies.

Also keep in mind that if you're in an affiliate program and someone comes from both sources, the Google ad gets the credit. So don't bother running ads for a company that's already paying you affiliate commissions.

The program is still too fresh to have much feedback, and publishers should watch their ROI compared to regular AdSense. But it looks like pay-per-action could lead to higher earnings if it suits your site and its target audience. Choose relevant and compelling ads and take advantage of the promotion opportunities that come with it.

If you're interested, you can sign up to be considered here .

Derek Gehl

Derek Gehl is the CEO of the Internet Marketing Center, an internet marketing firm that has helped thousands of people learn to start and run their own online businesses. IMC hosts a new Search Marketing Lab Forum, where members have their strategy questions answered by search marketing specialists.

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