Five Thoughts on Google PPA

Filed under: Affiliate Marketing - March 23, 2007

In my last post I expressed some concern about Google's recent Pay-Per-Action entry into affiliate marketing network space. Since that writing, I've had more time to think about things and consider other angles. Here's five thoughts on Google and affiliate marketing in general that help me put Google PPA into perspective.

1. Google covers the bases by offering lots of tools.

I see this as savvy business planning and investing. I don't blame Google for entering other spaces and competing. Competition is a good thing and produces better products and more options. Bring it on. This is nothing new and Google has many excellent competitors in this space. Google's actions in any area tend to spawn new service providers as well and that's great news.

2. Google is heavy on technology but light on service.

Unlike Google, successful affiliates are heavy on service. They offer value-added benefits that consumers want. In many ways Google needs the creativeness of affiliate publishers and advertisers more than affiliates need the technology of Google. In short, Google would not be needed if there was nothing new of value to search for.

Customers go where the services are. I don't think there's a lot of deep loyalty to Google since there's not a deep relationship with Google. However, many affiliate publishers have created long-lasting relationships and loyalty brought about by their services.

3. Google PPA is really nothing new.

Paying per action is not much different than paying per click via Google AdWords. Savvy advertisers already factor into their profitability equation the cost of clicks needed to get the desired action when using AdWords. I predict that Google PPA will not amount to any significant cost savings over Google AdWords since competition continually pushes things to an equilibrium. (I could be proven wrong if PPA is applied to Google's content network since the majority of fraud occurs here. In this area it could be an effective tool for combating click rings.)

4. Just because Google is doing it doesn't mean Google will dominate that sector.

The only area right now that Google really dominates outright is search (organic and paid). Even here their reach is just over half the market. You could also argue that they now dominate video with their acquisition of YouTube but I don't think they're anywhere close to a lock in this new playing field.

So I started thinking about Google products along these lines. I see strong competition for everything Google does (including search). For example, there's a lot of competition to Blogger, Gmail, Google Maps, and Google Analytics to name a few. Their entry into these areas didn't end competition from MovableType, WordPress, Yahoo!, MapQuest, ClickTracks, and many other companies. True, in some cases these companies had to alter their course a bit to respond, but that's nothing new for a dynamic business.

5. There's lots of opportunities for everyone!

LinkShare, Commission Junction, Performics, ShareASale and others who provide affiliate marketing network services really have nothing to fear. Sure, they may have to alter their way of doing things a bit but they're in the business of providing service and that's something that Google doesn't do much of. That's a huge home court advantage for them.

I feel that instead of suffering, successful affiliate marketing network providers will end up experiencing growth from this as many merchants try PPA on their own, get no traction and seek professional help from the experts. That's great news for the whole industry -- including affiliate publishers like me.

In conclusion, instead of worrying, I see this move by Google as validating the affiliate model. It means that affiliate marketing is strong, viable, and growing. That's very exciting!