Google Confirms Testing New Ad-Pricing Model - InformationWeek
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6/22/2006
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Google Confirms Testing New Ad-Pricing Model

Advertisers will pony up when consumers buy a product, qualify as a sales lead, or sign onto a mailing list.

Google Inc. on Thursday confirmed that it's testing a new ad-pricing model that would have advertisers pay a fee when online consumers buy a product, qualify as a sales lead or sign onto a mailing list.

Testing of the new model, often referred to as "cost-per-action," was first reported in The Wall Street Journal. The new pricing is seen as a way to deliver a better return on investment to advertisers, and as a means to combat click fraud, the newspaper said.

Click fraud refers to the clicking of an ad link to either drive up the cost to advertisers or the revenue to publishers. Competitors sometimes perpetrate the former, while the latter by unscrupulous Web sites.

"We are currently testing a cost-per-action pricing model to give advertisers more flexibility and provide publishers another way to earn revenue through AdSense," Google said in an emailed statement. "We're pleased with how the test is progressing and will continue to gather feedback from advertisers and publishers."

The Mountain View, Calif., search engine refused to provide further details, but the Journal reported that the new ad pricing would be in addition to the services Google currently provides.

Google sells ads based on bids for keywords used by people during Web searches. The search engine collects a fee every time someone clicks on an ad listed in search results. So-called contextual search advertising provides a major portion of Google's revenues.

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