Pay per click marketing is changing. Google has just announced it is going to offer a CPA model. At the moment it is possible to make a decent living by being good at PPC arbitrage of CPA offers. This works right now because Google and Yahoo have focused their business model around selling clicks, rather than selling actions. They do this because this is their version of branded CPM advertising – they can generally get more for it.
However, this causes huge inefficiencies in the system, because it is time consuming and complicated to figure out how to drive lots of PPC traffic, enabling therefore arbitrage opportunities.
Since Google has now started offering a CPA system, and Yahoo certainly will, this will change dramatically. Advertisers will be able to add a bunch of creatives into the system, along with a list of keywords and a CPA they are willing to pay. The system will then automatically test the base keywords you inserted, along with an extra list of keywords google generated itself. It will test them all against the various creatives you made; keeping pricing under a certain CPA you have set. The entire system will be fully automated, and the current arbitrage which is possible today will go away. Google and Yahoo can make quite a lot of money by making this change, given the average network commissions and the money made by PPC arbitrage players. Google has already switched and it is just a matter of time before Yahoo does as well.
Notice I don’t mention clickfraud – I don’t believe this impacts Google and Yahoo moving to a CPA model.
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