By now you’ve likely heard of Google’s Pay-Per-Action Beta announcement wherein advertising is sold on “a new pricing model that allows you (the advertiser) to pay only for completed actions that you define, such as a lead, a sale, or a pageview, after a user has clicked on your ad on a publisher’s site.”

What you’ve likely not heard are brilliant observations from respected industry experts.  I’ve collected them for your consideration.

Peter Caputa IV
(via TechCrunch)

“... what if Google manages the risk for the publisher? It wouldn’t take much for them to compare an eCPM from different CPA, CPC and CPM offers and choose the right ad to run to maximize conversions and profit for them and the publisher.

The real reason that CJ, LinkShare, Amazon’s programs haven’t scaled is because they don’t have liquid markets:

1) Most small businesses can’s participate because of specialized knowledge, resources and investment required.
2) Most publishers can’t manage the risk, especially if they can sell high value ads f2f or phone2phone on a CPM basis.

Google COULD bring liquidity into the market by lowering the barrier to entry for advertisers to participate in CPA/PPA advertising and for publishers by choosing the ad that pays them the most, whether it’s CPA, CPM or CPC. We’ll see.”

Alan Rimm-Kaufman
(via TechCrunch)

“... the beta is only for content sites—eg the adsense network. That’s an important issue—that’s where all the fraud is. Another angle not discussed here in any depth yet is trust—some retailers reluctant to share conversion data w/ G.”

Aaron Mentele
(via TechCrunch)

“The text ad links will be something the advertiser chooses whether or not to support. Most of our clients wouldn’t support them for a few simple reasons. The first and most important is that they’re accountable for all messages marketing their products. If a publisher writes 0.0% APR, or guaranteed weight loss, it’s the advertiser that gets stung. Google doesn’t have a good way to allow advertisers to keep track of all the instances and the context surrounding them (’apply now’ text ad links.) Most of the big advertisers just won’t allow it.”

Pat McCarthy

Will this hurt lead generation or affiliate arbitrage?

I’m not sure I care. Businesses need to provide value, and if Google just made it more efficient so that it’s harder to arbitrage stuff, so be it. I’m not necessarily against arbitrage, but you can’t expect companies to leave things inefficient. Arbitrageurs are always looking for an edge, and most likely they’ll still find one somehow and somewhere.”

Sam Harrelson
In reaction to a statement I made questioning the strength of the Google Economy relative to the quality of visitors they’ll be able to deliver, Sam asks us to consider Google’s move as one that recognizes the predicted Attention Economy and throw away our old school thinking!

“‘Quality’ is as dead as (Web) links.
It’s not about quality (or quantity) anymore. This revolution happened in other industries and in the Academy almost 20 years ago and we’re just now getting it in the marketing world.

Advertisers are paying for attention, not quality leads or quality actions. That attention can be evaluated based on a certain number of metrics but our antiquated notions of ‘quantity’ are not one of those canons, or yardsticks, that will be used to measure.”

Put that in your pipe and smoke it for a moment.

Myself, I think it’s important to first note that, so far, Google is restricting the CPA option to its syndication network… indeed.  This has many implications as does the company’s suggesting it will enter into a familiar realm… text link ads.  Overall Google is taking aim at the fastest growing part of the Web: what most are calling social media.  The question is, will they open up a new realm to be gamed by their affiliates?  It seems highly likely based on history that the manipulating of consumers to take actions that they don’t really want to take is imminent.

On a brighter note, the opportunity exists for Google to

A) lower the (cost and complexity) bar for entry on CPA advertising while offering up their most valued (by advertiser) asset—scale

B) manage risk for publishers by calculating an eCPM and serving up the most profitable ad based on its secret sauce relevance algorithm

This entire move plays beautifully on advertisers’ love affair with scale AND relative disdain for actually doing the work—targeting and optimization that serves their better financial and customer-based interests. 

Bryan Eisenberg provides excellent perspective (from a higher level) at Conversionrater.com when he says…

“... most sites still struggle with converting visitors. Once you get good enough at converting visitors it is almost always more effective to buy CPM based on a lower price to your normalized cost per action. CPM are much easier to negotiate and like you said less risk to the publisher. There are not many publisher that are fond of risk.”