Google PPA Advertising – Affiliate-Eyez Killa!

Google today made the announcement that they are testing their new pay-per-action (PPA) advertising product.

I’m sure the market speculation will continue furiously.  From TechCrunch and Michael Arrington, there’s a heated debate about whether this is a CJ and LinkShare killer.  Mike Arrington seems steadfast that CJ and LinkShare are smoked – others are launching accusations that he doesn’t understand the affiliate marketing space.

Andy Beal (Marketing Pilgirm) references a nice quote from a Google executive, “We think this is different from the traditional affiliate marketing industry.”  There’s reason to be doubtful of the whole truth of this statement.

From a publisher’s perspective: as I’ve at least hinted at before, affiliate marketing is something that is you either love or hate.  The reality is that certain business are suited best for CPA (conversion marketers, virtual salesforce- get the sales) and certain businesses will do best with CPC (content, community- anything NOT geared towards improving the odds of the sale later).

My Predictions for the shake out:

• OPMs (outsourced program managers) are the new PPC professionals/firms.  With a new ad model to master for huge benefits, the OPMs will benefit greatly.
• CJ, LinkShare, Performics, ShareASale all find a niche.  It will change the way that they do business.  It will wreak havoc unfortunately.  In effect, they need to become OPMs of the highest level.  All three to varying success have tried to enter the Paid Search Management business.  They’re smart enough to realize that these two businesses are now one in the same.
• Eventual consolidation of CPA networks.  Google’s size has such a way of ironing out the inefficiencies in the market that I can’t help but think this will happen.  From my perspective, I hope that this weeds out the “filth” but using that word prudently.  Walk around Ad:Tech and count the number of CPA networks.  Does this need cleaning up?  Absolutely.
• Affiliate Marketing as we know it is GONE.   It’s a horrible name, a hold out from old days of two-cent affiliate programs.  Affiliate marketing has grown up to the point where it at least can be termed “performance marketing” and can eventually cross over into the mainstream as an option for all businesses publishers.
• Explosion of the PPA ad model.  If the way Adwords revolutioned (read: simplified through do-it-yourself) advertising for small merchants crosses over to PPA advertising, the PPA ad model will have endless possibilities.

I could go on and on, but need to look into Google PPA further for my own uses!  It’s great news from an advertiser’s perspective.  My personal hope is that it’s a positive step to explode the PPA market in a positive way that makes everyone (Big affiliate networks, CPA networks largely) rethink where they add value.

Efficient Ad Models

Everyone has their take on efficient ad models.

Seth Godin has an interesting, if a little odd, take on the advertising model.  On first glance, it looks like affirmation of why he  is considered one of the most brilliant marketing minds out there.  He’s combined fixed ad placement pricing and Digg-style voting to dictate rankings and reward good offers.

If you thought click fraud was a problem, push in voting fraud and the skeptics are going to have a field day.  Gaming the system in a transparent voting system means that it’s a perpetual cycle – fraud rankings can lead to more upward votes that are actually legit!

SquidOffers right now looks like a paid Digg.  You pay an entrance fee for the right to be a part of this Digg.  It is a neat way to monetize a previously invented system.

I honestly don’t believe AdWords is broken.  Seth says that you are penalized for writing ads that work, but if you’re paying an appropriate amount for clicks – you do want that additional traffic.  Pay-per-click: you know it’s response advertising and you pay more when you get more responses.

Right now, the SquidOffers system is fixed pricing.  Make this an auction or offer-based system and you’re coming closer to a more efficient market.  Fixed pricing works, but only if you price below the market.  Price over the market and even offers that do well won’t see the value.  It’s admirable that Squidoo puts relevancy above profits.  For an ad model, this does effectively mean that you’re leaving money on the table.  Again, fine and well if you want a monetized Digg, but not if you are really looking for an efficient and effective ad market that properly rewards content creators.

Google’s cornered the pay-per-click model.  In reality, the only reason why PPC is all the rage now is that clicks is what Google is good at.  A search engine is all about clicks – it uses the relevancy ranking to control how many clicks your ad gets.  It has absolutely no control after the click, so it’s charging up to the performance metric that it has any control over.

A fully efficient ad model combines market-driven pricing and pays publishers for performance up until the point that the publisher has no more control over performance.

So what’s the most efficient ad model?

• Awareness = Impressions
• Prospects = Pay-per-click, pay-per-call, pay-per-lead (to a certain extent)
• Customers/Users = Pay-per-sale, pay-per-signup

How do we get to a more perfect market?  I think the only way this gets better, as it’s pretty good right now, is when platforms continue to push towards affecting the final conversion to a user/customer (maybe even loyal user and loyal customer?).  You’re seeing just the beginning of it as Google makes its way into the commerce world.

eBay is a marketing platform as well – it’s just the best know platform of pushing up towards the exact performance metric that matters.  On iLetYou, we have some control over how well our stores perform in real revenue.  Thus, we push our pay-for-performance model to the point of sale/rental because that will eventually be the most efficient model for everyone.

Thoughts on efficient ad models?  Share them here because this is one time I really with Seth’s blog allowed comments to see everyone weigh in…

Free wireless

So I’m sitting at one of my favorite San Diego area cafes, sit down and realize that I mistakenly left my Verizon broadband card at home.

My only option is to go unwired (yikes!) or to check wireless networks. The default network has limited or no connection, but I notice another WiFi network with the cafe’s name. How long have they had this fast, free wireless up that I could have been using?

Wireless in coffee shops is an interesting dilemma. You can hear the ka-ching! in a proprietor’s head as they dream of charging $10/day for Internet access. I find this to be a ripoff, so I went with the broadband card despite periods and areas of intermittent connectivity. I’m probably not the only one.

So give it away for free. You’re not going to make any signficant money anyway. It only makes some sense (and even this is questionable) for Starbucks where the sum of all of the Internet fees charged at least shows up somewhere to the top and bottom line.

This business is doing well already even with no free WiFi, so encouraging laptop toting squatters might even seem detrimental. But it’s not – it garners good will with a significant portion of the coffee shop crowd and you still have students and broadband-card carrying squatters to deal with anyway.

I frequent this place nearly once a week even without the WiFi. So now it’s my #1 cafe spot of choice with WiFi. This may not seem to show up on the bottom line either, but it’s just one thing you should do for your customers – give them something for free or do something for them you didn’t have to do.

Shun the non believers…