Google’s Is Now an Affiliate Marketing Network

In my opinion, Google’s new Pay-Per-Action (beta) signals an interesting mix of opportunities and problems for everyone involved in affiliate marketing. While not identified as such, Pay-Per-Action is really an affiliate program. This makes Google the newest and soon to be largest global affiliate marketing network.

Google describes Pay-Per-Action as a 3-step process of 1) creating ads and defining actions, 2) securing publishers who will display these ads, and 3) paying for completed actions. Google administers and tracks the process just like an affiliate marketing network. As Shawn Collins discussed today, Google’s affiliate marketing entry really isn’t new since AdSense is really a pay per click affiliate program. I agree, however, Pay-Per-Action moves Google from merely having a PPC affiliate program to being an affiliate marketing network. This is a huge shift, in my opinion, and one that should concern everyone.

Above I said there were both opportunities and problems with this move. I’m not yet sure what opportunities are available but creative affiliates will think of some. My main reason for assuming opportunities do exist is because I prefer to consider problems as also creating new opportunities. The glass is half full. However, this move represents a seismic change for our industry, especially for CPA networks, smaller affiliate marketing networks, and affiliate publishers like me.

I’m not predicting the end of affiliate marketing networks or affiliate publishers. Google Analytics didn’t put all the other web analytics providers out of business. Google AdSense didn’t kill all competing ad networks. It did force them to alter their business models though. Since Google is heavy on technology but light on service, this move could end up helping affiliate service providers. Hey, that’s an opportunity!

That being said, I’m concerned since Google can be a formidable competitor. Consider this: Google has all the data it needs to dominate affiliate marketing. They have collected years of AdSense, AdWords and Google Analytics data. With Google Checkout, Google closed the loop from the search engine through traditional affiliate channels to the merchant’s site and then through the checkout process. Now they can easily connect the dots and monetize it their way. They have data on all of us and know who performs well and probably even why.

I think it’s logical Google will take the next step to “maximize shareholder value” by fully competing within the affiliate network space. It will be interesting and could get ugly. I vividly remember hearing co-founder of LinkShare Stephen Messer predict and warn of this very move years ago at Affiliate Summit 2005. Let’s stay alert. It wouldn’t surprise me if Pay-Per-Action is how Google plans to monetize YouTube.

About Mike Allen

Founder of Shopping-Bargains.com, LLC, a coupon and deal source featuring nearly 2000 merchant partners in the US, UK and Canada. Recipient of the Affiliate Summit Pinnacle Awards 2009 Affiliate of the Year. Learn more about my 10+ years in affiliate marketing and my other projects at MikeAllen.me.
You can find Mike on Twitter: @mta1.

  • Jonathan (Trust)

    "This makes Google the newest and soon to be largest global affiliate marketing network."

    I would hold off on that. Right now it's just U.S. and it's beta. There are affiliate networks right now in many countries and successful.

    Now with Adsense they were successful because there really wasn't anybody else doing that. With this, it's just cost per action stuff which is nothing new, just somebody new doing it.

    Good discussion here, goes a little deeper:

    http://forum.abestweb.com/showthread.php?t=87209

  • http://www.jimmydaniels.com Jimmy Daniels

    If all they give affiliates is those damn javascript links like they use on the Google Pack, then none of the affiliate networks should be worried at all. I'll reserve judgement until I see some creatives.

  • http://www.Keycode.com Kurt H. Lohse

    Relating specifically to the challenge to Affiliate Marketing Network services, I see Google CPA as a late comer to the party. It was easy and convenient for them to show up, but not really all that necessary.

    As I see it, the Google CPA product creates a safety net against the failure or absorption of the Networks as opposed to posing a real challenge to them.

    The core usefulness of affiliate networks stems from three primary business aspects of our industry: Convenience/efficiency, technology, and
    relationships/management. Google (or any large Internet Company for that matter) can offer a product like Google CPA to challenge the convenience and technology of the existing networks overnight, but they have a long, long way to go to compete with the relationship/management aspect the business.

    In most industries existing working relationships are the primary competitive advantage, and managing relationships is not necessarily one of Google's strengths.

    Google launched a number of potential "category killers" with limited success in recent years. Products such as Froogle and Google Checkout were
    touted by many as spelling the end of affiliate marketing as we knew it. I don't think either of those products will ever represent a significant
    change for the affiliate marketing industry – and I don't suspect Google CPA will either.

    Remember, if Google believed so much in the power and potential of the CPA (really Cost Per Sale) model, they would have converted their AdWords
    bidding from CPC to CPS long before now.

    Affiliate marketing is a completely different business from mass advertising. Clearly, it is far more lucrative for Google to continue to focus on services that are substantially less accountable.

    The more they push the Cost per Sale ad services the more they are apt to pull from the CPC side. Google CPA was developed for diversity and coverage and I doubt you will see them push very hard to make it a serious threat.

  • http://schaafco.com Brook Schaaf

    Good posting, Mike.

    I think Kurt makes some good comments. We'll have to see how it turns out. I share your apprehension of a "Google-take-all" internet. I think you'll start to see more people declare non-use of Google products so that their information doesn't end up in one place. I, for one, never installed Google desktop because it made me leery.

    On a more positive note, it otherwise augers well for the much-maligned CPA space by demonstrating long-term interest and demand.

  • Heather Paulson

    You are not surprised, I am not surprised this has been coming and more is to come…