Is Cost Per Action the Future of Online Advertising?
Mark Boslet at Dow Jones wrote a great piece on this subject yesterday “Internet Cos, Advertisers Study Changing Online Ad Market.”
The first sentence of the article makes it clear the potential game changing nature of CPA:
“A potential shift in how online advertising is sold and billed has advertisers and Internet companies scrambling to understand its full effects.”
My take away from the article is this: Pay Per Click advertising is too profitable for CPA to take over at present. Sure CPA eliminates risk for advertisers, but why should intermediaries like Google, Yahoo! and MSN take more risk if they don’t have too?
The current pay per click system may hang on as the dominant model for several years, but CPA is inevitable in my opinion. Technology now makes it possible to deliver advertisers 100% accountability and certainty in their advertising. This is an extremely powerful concept that eliminates a tremendous amount of waste from advertising; waste that could and should be reallocated to end consumers.
At the end of the day, advertisers are in the business of selling products & services, not clicks. The transition from the Gross National Click Economy online is coming and I hope Jellyfish and its new VPA advertising model leads the charge and moves this transition forward.