Future Thoughts Google’s CPA and Checkout Moves

There has been alot of debate over Google’s new CPA offering into the marketplace as well as their “checkout” bid. Some selected readings on the topic:

Google’s Content Referral Network: A Grab for Advertisers

Google Checkout: An Affiliate Network Industry Trojan Horse?

Google Checkout Steps Up To The Plate

From Om Malik’s Why Google Is Doing Checkouts?

This leads me to some interesting thoughts, observations and questions for the weekend. Especially since my studies of late have been about click fraud, botnets, and the convergence between malware and money.

When you see the make-up of basic “deal structures” driving so much buzz you have to wonder what state of the e-commerce are we in?

While Google might offer CPA it is still going to have to back out to a good eCPC for it to work on a syndicated basis. Publishers will go to where the money flows. In addition it is going to have backout at a rate to make it work at levels that their investors are accustomed too!

Thus I think the more insulation you want from deal structure risk the more you will have to payout. Malik (see above links) might be right that it is an assault on MSFT and YHOO’s emerging CPC networks. I would add that Malik likes to boil down CPA far too neatly for me “As an advertiser, you have no risk.” No- you have less risk. It is mind boggling that the affiliate industry understands CPC so well, yet the rest of the world is ignorant of how it works. Was this the only industry paying attention at the turn of the century? But watch as the mantra of CPA becomes coupled with “Riskless and Free branding!” once again…

Still Google doesn’t like to do anything unless it scales…a good strategy. Does GOOG plan to deliver on what networks have struggled with for years? The scalability and reach of deals in non CPM or CPC format? Certainly they have the reach figured out…

With that in mind how does Snap.com figure into this? What could be learned by watching them? They have been fairly ignored in the marketing mix and probably because they aren’t a super power. They have tried to differentiate themselves by making bold statements like “What’s wrong with search today? We think Google, Yahoo, MSN and all the rest of the big search players have settled on the wrong search paradigm: text-in, text-out”.

Perhaps more bold, and forward thinking, has been their adherence to at least offer the CPA model of advertising as part of the choices. I mean as a customer I always like to have a choice. It doesn’t have to be a lot of choices, heck, for many just the appearance of a choice is good enough.

You have to like their anachronistic thinking though…it is kind of like a when a kid comes up to me and says “I have just heard the coolest new song called Stairway to Heaven.” Yeah kid- it’s cool, but it’s only new to you- it is actually as old as I am.

Finally, a search engine offering true pay-per-performance advertising. Snap’s cost-per-action advertising options mean that you pay only when you get the action you want from the customer, giving you maximum flexibility (a customer “action” can be a purchase, download, registration, subscription, lead, or just a click). You decide what makes the most sense for your business. Since you don’t have to pay for traffic and ONLY pay for actual conversions on your site, you have virtually ZERO RISK and an INCREASED RETURN-ON-INVESTMENT.

I add the caveat of experience- “virtually ZERO RISK” is an appropriate qualifier for most, but not for me. There are many risks, but merchants, in their zeal or ignorance, often only look at the bottom line. I don’t blame them. We could get into increased ROI but that is another can of worms. Performance marketing sounds oh so easy on the surface, but if you do it, or have any real experience with it you know that isn’t the case.

At one point in history ex-CEO of Linkshare, Stephen Messer did say something to the effect that Google was the enemy (I think he mentioned Amazon too). Messer cashed out it and it seems at just the right time. Was he right?

Now if you want to go many, many steps further and look light years ahead, and probably sound as insane as Messer did at the time, you might ask- Could Google, one-day, be the MERCHANT’S enemy?

That is a loaded question…which is how I like to start a holiday weekend.

About Wayne Porter

Wayne Porter is one of the original founders of ReveNews.com, and served as the CEO and founder of XBlock Systems a specialized research firm on greynets and malware research before being acquired by unified communications security leader, Factime Security Labs. His work includes serving as a panlist at the Federal Trade Commission to shape legislation on software and the creation of two patent-pending technologies for corporate networks. Wayne is a frequent speaker at e-commerce & business events including CJU, ASW and RSA and frequently cited in the press. He has been designated a Microsoft Security MVP three times and is recognized on Google’s Responsible Security Disclosure page- in addition to receiving the first Summit Legend Award. Wayne currently works as a Security Consultant on Social Media and operates a consultancy on digital worlds. His hobbies include reading science fiction, playing chess, fishing, writing, collecting shiny digital gadgets, playing racquetball and studying memetic engineering. He maintains a personal weblog at WaynePorter.com detailing his explorations in security, web 2.0, and virtual worlds.
You can follow Wayne on Twitter: @wporter.

Website: http://www.wayneporter.com