Business technology

Online Marketing: Google Pay-Per-Action

- March 8, 2008 2 MIN READ

Targeted traffic still isn’t enough to convince most small to medium businesses to advertise with AdWords. The result is Google’s latest initiative – Pay-Per-Action.

What is Google Pay-Per-Action?

Google Pay-Per-Action is a new advertising model that’s still in beta testing mode. When it’s launched it will work in conjunction with AdWords. Instead of paying for a click to your website, you only pay when someone has completed an action on your website, like purchasing an item or submitting a lead form.

The adverts will only be displayed by AdSense publishers, which means they won’t appear in the standard “Sponsored Links” section on a typical Google search. They will however be appearing on targeted websites, as mentioned in my previous article, using affiliate marketing to generate leads, website publishers only place ads on their website to make money, therefore your advert is usually in a highly targeted and relevant environment.

How does Google Pay-Per-Action work?

Just like an AdWords campaign, you select a range of keywords that trigger your advert to be shown. You can also tailor the campaign to specific countries. Again, like AdWords you can split test ads to find out what makes people click through and which ads lead to conversions.

You simply place the tracking code on your website and voilà, you are ready to watch the leads come your way.

I have skipped over probably the most important step, which is to set the cost per action (CPA). Guessing at the rates is tricky as Pay-Per-Action is still in beta testing. In the absence of any indicators of CPA, you will have to closely watch and experiment. I would also suggest figuring out the value of a lead to your business.

Want more articles like this? Check out the SEM strategies section.

How can I use it?

If you sell stuff on your website, then you’ll be using it to make sales. If, like most of the Flying Solo readers, you offer the intangible service then you’ll be using it to collect leads. We all know from reading our website statistics how many visitors it takes for one to fill out a lead form, so the advent of CPA will mean you can create targeted landing pages with the sole intention of converting your visitor into a lead.

How do I work out the value of a lead?

If you already run Google AdWords you can figure out how much you are currently paying using this formula:

Average Cost Per Acquisition = Average Cost per Click / Conversion Rate

If not, it is time to experiment. Start low and see how quickly the leads come in. If you’re not selling a product, you’ll need to evaluate the quality of the leads.See whether they are difficult or easy to convert into a sale and then work backwards, taking into consideration your profit and how many leads it takes to make a conversion.

That’s the end of the three part series on online lead generation, and you have two questions to answer, how much is a lead worth to your business and how would you calculate the cost per lead – formula, guestimate or gut-instinct?

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  • Andrew Caska

    Caska IP Patent Attorneys

    'Flying Solo opened up so many doors for us - I honestly don't know where I'd be without it"