The Bankwatch

Tracking the consumer evolution of financial services

The perversity of online advertising

 I certainly don’t pretend to be any kind of expert in this area.  Seth makes a point here which, while I know it to be true, makes me shake my head.

There are very few sites built on Amazon affiliate revenue alone, mostly because the affiliate deals don’t convert often enough to make them worth what’s paid.

Source: Seth’s Blog: Inventory and Risk

His argument is that marketers will not quickly shift from PPC (Pay per click) to PPA (Pay per Action) because the “A” in action happens too infrequently!  Hello …. this means that the “C” in click is producing non economic activity – it used to be called brand awareness, in the old days.

I have been long suspicious of the success of Google Ads, and have written about that before.  Yes the clicks are there, but is anyone buying anything.

Perhaps PPA just needs to sort out the economics of the “A”, which of course is hard, because the value of a car is different than the value of a book.

But there is something fundamentally perverse afoot here, and internet advertising as a model has some way to go in its evolution.  One has to believe that PPA is getting closer to the answer, but me … my long term bet remains with VRM, which provides customer control over the vendors/ merchants.


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Written by Colin Henderson

March 22, 2007 at 15:38

Posted in Marketing, VRM

2 Responses

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  1. Hi Colin,

    I claim to be even less of an expert than you in this space. Here are my thoughts:

    * Maybe Amazon affiliates do not cover a large enough domain of offerings for a site to survive off their revenue alone

    * Pay per Action is not necessarily viable in many industries. For example, my blog gets enterprise software adverts, but these never get sold online. Clicking through gets the advertiser a little more than brand awareness – it enables the advertiser to start engaging the potential customer with more meaningful information and discussion.

    *PPC still seems to be a better model than broadcast advertising, or worse still printed junk mail. At least a website can track the economics of the number of click-throughs and eventual sales, which will help them see for sure if they get a return on investment. Google backs this up with their free Analytics tool, which allows monitoring of marketing efforts. For a free tool it looks pretty good, and you can see that Google is trying to convince advertisers in the value of PPC through real information.

    I’m guessing that advertising models will continue to evolve, as will all marketing and PR. Who knows if Google will capitalize on the next wave, or someone else.


    Phil Ayres

    March 23, 2007 at 06:54

  2. Thanks Phil …. your second point is key. Research proves that almost everyone starts their purchase activity online, yet as you state complete it in a different channel. Capturing those activities is not as simple as PPA, yet PPC has no guarantee of success. Advertising is a tough business.


    March 23, 2007 at 11:09

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