News from the US reports that Google is ‘optimistic’ about extending its test of a cost-per-action (CPA) payment model alongside its traditional cost-per-click (CPC) business. It’s a development that demonstrates the increasing importance of the CPA model as advertisers are demanding more and more accountability from their online marketing programmes. This general trend helps to explain why the affiliate marketing sector, which already pays out on a CPA, has been one of the fastest-growing online segments for the past few years. It’s logical that Google would then want to follow that trend itself in order to keep its share of the pie. However, concerns that Google’s move presents a threat to the traditional affiliate marketing industry are over-hyped.

For a start, Google’s approach to advertising has always been a very automated one. The AdSense product, to which the CPA model will first be applied, was very much meant to be a ‘plug-and-play’ solution to publishers to monetise their sites. And while the CPA payment model will now allow advertisers only to pay out if someone comes to their site and buys, it will do nothing to actually tell them how to improve their conversion or site performance. Affiliate marketing networks today take a very different approach. At we also use our technology to support our publishers and advertisers, but we complement it with a high-touch level of service. We work with our advertisers on choosing the right creative, constructing efficient landing pages, positioning their products appropriately on affiliate sites, and improving their acquisition funnels. And our ‘open’ approach that encourages communication between our advertisers and affiliates provides better understanding to affiliates of the advertiser’s products, markets and USPs. This translates into growth for the network and growth for the affiliate marketing industry in general that Google’s moves will be unlikely to impact.

Secondly, most affiliates that already participate in the industry today have grown significantly in terms of sophistication and variety. A typical campaign through the network today will see traffic driven from PPC affiliates, SEO affiliates, verticalised content sites, affinity or reward sites, shopping comparison engines, email marketers and more. Many of these affiliates today already have the ability to use AdSense on their sites but choose not to because their requirements are greater than what Google offers. They need customised creative, up-to-date product information and in many cases live product feeds. At our technology and account management approach already provides for these needs, which will only grow more complex over time.

Ultimately, Google’s entrance into the CPA market is an endorsement of the business model that has fueled the success of affiliate marketing networks to date. However, its ‘plug-and-play’ approach will leave plenty of room for the existing affiliate industry to continue to grow.

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Published on: 12:00AM on 29th March 2007