Google Testing New Online Ads

This week, Google expanded its testing of pay-per-action advertisements, an alternative to the pay-per-click model that the company now uses. Unlike the pay-per-click model, advertisers are charged for pay-per-action ads only when a user goes on to perform a specific action after clicking an ad, such as purchasing a product or completing an online form. Google said that the new ad model could help prevent click fraud, which is a common problem with the older model.

A limited beta of the pay-per-action ad model is now available to United States-based Google AdWords customers. "You'll only pay when a user clicks on your ad, visits your site, and completes your desired action," Google's Web site explains. "Pay-per-action ads \[provide\] a new pricing model that extends your reach and allows you to pay only when a defined action is completed on your site."

Google isn't the first company to test pay-per-action ads, but as the online ad market leader, Google's testing of this model is the first step toward making it a mainstream online-revenue generator. During this test period, Google isn't deploying pay-per-action ads on its high-profile search site, but presumably the company will switch to pay-per-action ads, at least partially, sometime in the future.

Google currently controls about 56 percent of the US search market, compared with 20.7 percent for Yahoo! and 9.6 percent for Microsoft. Google's revenues in fiscal 2006 were more than $10.6 billion, with about $10.5 billion coming from online ads.

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