Posted January 24, 2008 2:12 pm by with 5 comments

Tweet about this on TwitterShare on LinkedInShare on Google+Share on FacebookBuffer this page

That is the question that Aaron Goldman discusses in his most recent post at Search Insider. Aaron provides some sound thinking as to why CPA could overtake CPC in the future as the preferred way in which to purchase paid search.

With the assistance of one of his fellow authors Aaron, formulates an interesting point of view and one I believe cannot be faulted. He notes that the big three search engines have all recently purchased their own advertising networks and the potential for “insider data trading” could exist. Not that anyone believes the big three would go that route, but he notes a CPA model would eliminate the largest concerns marketers would have, should that ever unknowingly happen.

Aaron then goes on to nicely cover why CPA would be positive for marketers, consumers, and search engines. This is the real value of the article in my mind. I am not convinced the industry at large would ever make such a sweeping change, but really explaining the benefits of CPA may help lead media purchasers to consider CPA options as part of their paid search purchasing mix and this I believe is a good thing.

Aaron concludes his article with a compelling argument as to which trends point to a real possibility that CPA could become the standard for paid search. But even he states that he clearly only touches on the benefits of the move to a CPA model and he hasn’t touched on the downsides.

I believe this is one those articles that benefits the search marketing community because hopefully it will generate a larger conversation and encourage many marketers to consider the CPA format as part of their paid search strategy. What do you think about a move away from CPC to CPA? Does it have merit in your mind?

  • only if people like Google want to lose money.
    money dictates and while CPA may help the marketer the search engines [ Google] lose money and i don’t think they will allow that.
    yes i said allow – after all, google has every one by the ….. excuse me.

  • That would be great if CPA took over, but not likely.

  • I read that article on Wed. with hope and optimism also thinking it might spur some more dialogue among the community. It was a great article, and I agree with Aaron’s points. But one of the challenges, believe it or not, is that many marketers don’t know the CPA value of their goal action (if the goal is a conversion). That is one thing we at Adapt have been trying to educate our PPC management tool customers about (because one of the tool’s optimization strategies is based on target cost-per-acquisition.)

    With that in mind, I liked particularly that Aaron highlighted that the “A” could be any Action – from video view to newsletter signup to the most-commonly-used current definition of “sale.” If a broader definition is used (e.g. for many types of actions) then it might be easier for advertisers to truly follow that model & only pay for the actions they define.

  • It’s very interesting, but i don’t honestly see the search engines moving to a CPA model. It would certainly benefit users of the service, but anything that results in any kind of loss in revenue for the engines is very unlikely to see the light of day.

  • william

    The problem with the cost per action model is that a publisher does not get paid even though it is contributing value to a particular brand. Although a person may not take action on a particular click, brand awareness is being created. This in itself is value to a company. Traditional media create only brand awareness and is compensated accordingly. I am not for monopolies but I do not see how a publisher can operate on a CPA basis only without being compensated even minimaly.