Google Launches ValueClick Killer

Last night, after market close, I received the following email from Google's AdSense team:

The Google AdSense team would like to invite you to test a feature that provides you with a new way to earn revenue from your website by hosting ads that are compensated based on a Cost-Per-Action [CPA] basis. These ads are very different in that you will be able to choose amongst a selection and you will also have more flexibility in promoting them...

The attachment contained the following:

How do I participate in the CPA test?

Simply reply to the invitation email and express your interest in participating and we will send you some sample CPA ads. You can then choose which ads you’d like to host and we will send you the code to copy and paste on to your site. It’s just that easy!

What can I do to optimize my revenue from the CPA ads?

While we encourage you to experiment as much as possible with these ads on your site, here are some general tips on implementing a CPA ad:
1) Ads that blend in with the site and are placed prominently tend to perform better. Look to integrate the ad within the page.
2) Ads that are relevant to the interest of your site visitor also tend to perform better. For example, if you have a travel site, having ads relevant to airline travel would generate higher interest. For more tips on increasing revenue, please see our optimization tips page at: https://www.google.com/support/adsense/bin/static.py?page=tips.html&sourceid= aso&subid=ww-ww-et-asui&medium=link

How do I get paid?

You get paid whenever a site visitor clicks on the ad on your site AND performs a specified action, such as generating a lead or purchasing a product.

Do these compete with regular content ads?

These ads will not compete with contextually targeted ads. Instead, they will show across a separate network, the Content Referral network. To place one of these ads on your site, you can set up a new ad unit that supports any of our current ad unit sizes.

How much could publishers expect to earn with this CPA test?

How much a publisher will earn will depend on a number of factors about the publisher and advertiser, including whether the ads match the topic of the site, and level of interest of their site visitors. We have tried to match the appropriate publishers with advertisers for this test.

Will CPA offerings compete with my current AdSense revenue?

We expect that the CPA test will offer ad units that will expand publishers AFC revenue because the ad units are separate and appeal to different types of users. These CPA ads are also additional inventory to your existing AFC ad units.

How can I promote the CPA ad unit?

Since this is a test and these CPA ads are not regular ad units, we are giving you more flexibility in saying things like "I recommend this product" or "Try JetBlue today" next to the CPA ad unit. However, you should still not incite someone to click on the ad, so saying "Click Here" is not ok.

Where do these CPA ads comes from?

The CPA ads come from a limited group of high quality advertisers that are interested in displaying ads on a CPA basis. They pay you whenever a site visitor performs a specified action, such as generating a lead or purchasing a product.

Will I be able to see reports within my account?

When the test begins, you will receive weekly email reports of conversions you have accrued and your total revenue within the CPA test.

In other words, Google is launching a fully-fledged cost-per-action -- otherwise known as affiliate marketing -- network.

Let's not mince words. This is Google's ValueClick (VCLK) killer. Google has greater resources than ValueClick, a larger advertiser base, and the advantage of being able to offer publishers a full range of ads based on page views [CPM], clicks [CPC] and now actual purchases or leads [CPA]. Google can translate the performance of all these ads into "effective CPMs", allowing publishers to compare and optimize for whichever type of ad produces maximum revenue.

This morning, soon after the market opened, I shorted ValueClick. Stock buyback or not, this spells the end of ValueClick's Commission Junction business.

Full disclosure: short VCLK at time of writing; may cover at any time without notice.

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Comments

[Oneguy]

Very interesting -- I haven't been offered that as a publisher yet, but I have used CJ on occasion and I wouldn't be surprised to see Google destroy them. The VCLK put options don't have huge premiums, either, so they may be worth a try for the short-averse. Thanks for the update, I saw that here before I noticed any of the SE watchers had blogged about it, and as far as I can tell it hasn't hit the "real" news yet.

[dmc500hats]

dunno if it's a ValueClick killer, but if Yahoo & eBay don't wake up it' might kill them (or at least hurt them a lot):
battellemedia.com/arch...

curiously, CPA-based advertising *should* have been something either Yahoo or eBay (or Amazon) were much better positioned to do way ahead of Google.

eBay, Yahoo, & Amazon all have the point-of-sale data necessary to do CPA-based costing for ads, eBay & Amazon both have substantial audiences with payment acct data (eBay has PayPal, Amazon has 1-click buy acct info), Yahoo has an existing ad solution (Overture), and all 3 have tons of eyeballs they could use for ad inventory.

why any of them either individually or in combination haven't been able to pull this together ahead of Google is frankly rather surprising... the recent eBay-Yahoo partnership is smart, but rather late. it may take Google a few years to figure out payments & fraud prevention, but still no reason to wait for them to be first to market.

in any case, i'd expect all of them to be in the CPA game withing another 12 months.

- dave mcclure
500hats.typepad.com

[some one]

Anyone remember what happened when Google released their last "Valueclick killer" (CPM display network)? Absolutely nothing. It floundered. Why? Because distribution alone does not equate to market share. They have years of catch up to play against the players in each of the markets they have broken into. I wouldn't look for this product to play any factor at all for the next 3+ years.

[stephen harris]

David, I think you are mourning the demise of Value Click' CJ - and affiliate marketing as a whole way to early. First of all, Google does not have a great beta track record. With their resources, you would think they could corner nearly any market - but in truth, they do not. Secondly, even if GOOG's capitalization is larger than ValueClick - they are not going to go full force against CJ (and linkshare and many others)... and these channels aren't about to roll over and die.

Remeber how they said Google Base would take on eBay... I am sure no one at eBay lost 5 minutes of sleep. CJ won't either. I wouldnt sell VC short. I might consider selling GOOG short. As they stretch their resources into areas that take them further from their core business... it will ultimately put them in a negative position. Focus on what you do best... a lesson GOOG needs to understand.

stephen
think-ebiz.com

[Yan Bezugliy]

Looking back VCLK has performed quite well over the past several months. I guess G is too slow rolling out the new ad model to present any immidiate danger for VCLK...

[David Jackson]

You're right, Yan: nothing was subsequently heard of this. But I somehow think that Google will end up with the broadest set of ad solutions, and this is a clear part of that. In which case it's only a matter of time...

[Billy Jackson]

google is always thinking up new things


www.toddstocks.blogspo.../

[Billy Jackson]

i had not heard anything of this . Very interesting artice. In the end i think google will end up with the most solutions.

make-ice-cream.com

[Billy Jackson]

You're right, Yan: nothing was subsequently heard of this. But I somehow think that Google will end up with the broadest set of ad solutions, and this is a clear part of that. In which case it's only a matter of time...I agree with david
gourmet-chocolategifts...

[User 133243]

No wonder why Google's stock price has jumped. No one come close!

thinksx.com

[User 38309]

Imitation is the greatest form of flattery. Google has been killing VCLK for a few years but VCLK has grown. The ad market is still growing and there is room for both. VCLK has better customer service from what I read, so we will see.....

[Birdfan]

Googles plan didn't work well. It's already been dumped. Where will they go next?

freestuffheadquarters....

[Jonclaude]

Now I understand more about cpa thanks

[charlesd]

Wow all I can say is ABOUT TIME!

CJ works well but with Googles resources obviously this will end up being much bigger and better. I wish I had received this email as well but unfortunately I did not. Thanks a bunch for sharing I will be waiting for this.

[Maxi]

Google is making sure that nobody manages to catch them.

[Fish Gone Bad]

Google is susceptible to click fraud.

Bots that crawl pages can be programmed to act like humans. After reading # ISBN-10: 0735605653, I came to the impression that one day I would wake up and Google stock would be worthless. I am surprised that neither Microsoft nor Yahoo launched an attack from some eastern block country or China.