16:20 PM

The Achilles' Heel of GOOG's Pay Per Action

My colleague Richard Koman  blogged about Google's latest foray into monetizing online content: GOOG's unveils Pay Per Action advertising.

The gist: Advertisers will decide on what they will pay for a specific user action such as filling out mortgage application forms, or a questionnaire, or anything.

This goes beyond pay-per-click, Google's main advertising service,  because it potentially involves bringing someone closer to a sale, and so it is more valuable to the advertiser,  and to Google, and to the publisher of a web site.

Also, as part of this Pay Per Action model, Google offers a way of embedding links within a web page of content, which brings up an issue of content designed for advertisers.

This is typical of Google's observations of what works on the Internet. It always recommends to web site publishers that the format of its advertising links blend into a web page.  With Pay Per Action, website publishers can potentially further blend the content with the advertising.

Online content publishers are not doing all that well and so they might be tempted to blend advertising and editorial content but that is dangerous because it could undermine their editorial integrity. Google's advertising models might further erode the editorial integrity of online sites.

And it is open to spammers and fraudsters.

Filling out a form and getting paid $40 or more,  is easier to hide, and easier to do than having people commit click-fraud on pay-per-click ads. 

You could buy a CDROM of thousands of names and addresses, and within specific demographic groups, and have an offshore army of Pay-Per-Action form fillers. Yes, you'd need to spoof an IP address or two, which is easy,  and two forms filled out would pay for a couple of day's worth of scams.

How will GOOG guard against such easy pickings? Especially since advertisers are increasingly sophisticated about marketing in the online world. If the ROI doesn't match, the spending will stop very quickly.