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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.
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One of your more brilliant and informative (double dip) entries, Wayne. Anytime you link to me I’m going to have to call you brilliant
I look forward to pondering these questions with you in Orlando soon. We’ll need to find a good cigar to teethe on.
Indeed, we would seem to be poised to have a whole new set of advertisers “discover” CPA marketing. I’m sure there will be many “helpers” out there to sell them the “benefits” without discussing the risks.
Clever response. I think you see what I see?
The quotes around “discover” seem to imply you noted the subtle clue hanging over the loaded question- literally…
Haha… OMG, Your killing me with the brilliants, Jeff! I even had to share that with my wife.
Nice post, Wayne. Good summation of the situation.
Google has never been a merchant’s friend, they will just become less friendly.
Great post, and interesting comments. I think Google has shown a clear direction, at least in their advertising space, that Google does what they feel will maximize their revenues. I see the checkout and CPA moves as more steps to “lock in” the major advertisers into their system so they don’t jump ship.
Attention Merchants, Google wants to CHECKOUT your Customers!
After pondering Wayne’s post where he questions if Google is really the Merchant’s friend. I took a look at the following promotional video created by Google to explain the benefits of Google Checkout to consumers: There are a few things…
Great point Adam- so who “owns” the customer??…of course we can argue customers liberated themselves a long time ago!…but it is interesting if you ponder how many systems (from security to e-commerce) this shift will impact short-mid and long term.
-wayne
I checked out “Google-checkout”.
The overall process seems to be very easy but exactly that makes this solution very vulnerable. During checkout there was no security question to make sure that I’m indeed the owner of the Google account or the associated Credit Cards in that account. Of course I used my username and password but because there are so many Google sites, using the same username and password, it is very easy to loose your login information on a hijacking page as you might not check the url for Ad-Words or Gmail every time you log on as those services never had the possibility to shop with your Credit Card.
Now because you have one account and login information for all it is quite possible that hackers will try to get your login information from any Google service out there! Even worth is the fact that the hacker can change the password without any problem. The owner of the account might not even get any information about the password change as the e-mail is sent to the according and hijacked Gmail account.
Because of this HUGE security risk I would not recommend using Google checkout!
Please checkout the http://www.thebilliondollarpatent.com as s-registration solution that Google should have implemented in their service to make it solid and secure. This solution is requiring a third credential called TAN to make sure that ONLY the owner of that account is able to shop online even in case the account is hijacked.
I hope that everybody is aware of the security issue with Google checkout and will inform Google of a better solution!
Thanks and be safe;-)))!!