Pay Per Click Vs Cost Per Action

Should CPA Replace PPC?

by Donna O'Hanlon
of http://www.oyster-web.co.uk

Last updated: 12 Sep 2007

Pay per click advertising has been one of the most successful methods of advertising on the net so far. It has not only changed the way online retailers advertise, but also the Internet itself.

It was the case that a website would be launched with the purpose of enticing web surfers, then money would be made by adding products or services. PPC operates by showing advertisments that are relevant to the users earch query, thus attracting more users to a particluar site.

PPC advertising can generate an average of 12 billion dollars from online advertising alone. It is the search engines and the lage doorway websites that generate the majority of this income.

On the surface, this method of advertising seems like the most ideal method for everyone - search engines make money and advertisers generate sales leads or actual sales. However, click fraud is one of the largest scams to hit the online advertising.

The difficulty of policing web-based fraud makes click fraud more feasible than anyone would care to recognise. It has been reported that 14.7 percent of clicks are fraudulent, and that this fraud is worth at least 800 million dollars - an astounding amount, even by internet standards.

All of this has resulted in advertisers cutting back on the amount spent on ppc as the results they get are not worth the expenses. This has resulted in a declining reputation for ppc.

Search Engines have to find a way to considerably reduce click fraud but still remain purely a business that provides Search Engine results as opposed to becoming an agency that monitors the internet.

CPA (Cost Per Action) could be the solution for both search engines and advertisers. A cpa ad means
that the Referrer site gets paid only when an action is performed. So this means that a sales lead or an actual sale must be processed before the referral site gets paid for the click. This immediately eliminates click fraud.

CPA has major benefits for advertisers. With a normal ppc campaign, advertisers must pay every time a
user clicks. Search engines are not concerned if you make any sales from these clicks, only that they
get paid for each click. With cost per action, your success means their success. It also means small
business websites have more of an opportunity use the Keywords that only big businesses can afford and
give the small business an equal amount of exposure.

So that search engines can still benefit from this method of advertising, a percentage, possibly a fixed price of actual sales may be required in the future from search engines.

PPC is still an effective method of advertising, but not always reliable or safe due to its pitfalls. Cost Per Click enables advertising with no monitoring and the possibility of more profit for all parties involved.