‘Pay-per-Percentage’ and Other Non-PPC Models

Bill Slawski at the Search Engine Watch blog (via Shimon Sandler) points to a Microsoft paper about a newly proposed performance-based ad model “per-per-percentage” (PPP) — the latest in a series to take on “click fraud.” It’s an interesting model whose reason-for-being is to minimize or eliminate click and impression fraud. Slawski explains and quotes from the MSFT paper on how it would potentially work:

What does pay-per-impressions mean? Simply, someone can can for a percentage of all impressions for certain keywords or keyword phrases over a period of time.

In this system, an advertiser picks a keyword, e.g. “cameras” and purchases, perhaps through bidding, a certain percentage of all impressions for that keyword. For instance, an advertiser might pay $1.00 to MSN Search. In return, the advertiser might receive 10% of all impressions for “camera” for 1 week. What does this mean? It means that for 1 week, one out of ten times that someone searches for the word “camera”, they will see the ad.

The number of real impressions that an advertiser receives would not be affected by the number of fake impressions. The paper describes how this mechanism would need to work to avoid impression fraud, and how a broad match-type of system could function under a pay-per-percentage type system.

It’s important to note that the advertiser isn’t charged on the basis of clicks and that’s the primary way the system resists “click fraud.”

There’s now some momentum gathering around the concept of performance-based online ad models that are more fraud resistant. There are several recent high-profile CPA introductions (e.g., Snap, Jellyfish, and Google’s own CPA test). But effective CPA has been around for a long time and so has pay-per-lead. And PPCall is something of a CPA/pay-per-lead model.

Will any of these displace PPC? Over time possibly, but not in the near term. Generally it will depend on how bad a problem click fraud is perceived to be and the anti-click-fraud measures taken by Google, Yahoo! and Microsoft. More likely, if PPP is introduced by Microsoft it will simply be another way for some marketers to buy online ad inventory.

Effectively PPP is a yield management system based on a certain advertiser spend. Although the model as proposed is auction based, it’s not too far removed from managing a yield to an advertiser budget: something that Citysearch has done for a long time with SMEs, something that LocalLaunch is doing now with its publisher-partners and a feature of the new Panama platform at Yahoo! (However, these systems are sill click based.)

Click fraud is gaining greater “visibility” as SEMPO and other organizations try to get an empirical handle on what the real numbers are. (However the more coverage there is in the press the more the problem is perceived to be real.)

Click fraud is not a threat to online advertising, as suggested in the Microsoft paper. It may well turn out to be a threat to the PPC model. But online advertising is here to stay.

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2 Responses to “‘Pay-per-Percentage’ and Other Non-PPC Models”

  1. PJ at Knowing Art Says:

    It doesn’t sound like this does anything to prevent impression fraud. It just gives the advertiser a warm fuzzy feeling. If I’m an impression pushing publisher and I only push your ad %1 of the time, you won’t notice my inflated impressions much, but I’ll getting paid for inflated impressions for the other %99. Also I don’t get why you would want to lower your % reach on pages that convert well. I think Google checkout is the answer. You can’t claim “click fraud” when Google can prove how much money you made off those very same “fake” clicks.

  2. Screenwerk » Blog Archive » Google Checkout (Late Posting) Says:

    […] As Om Malik points out, it may be also about anticipated future migration to a CPA model. (I think CPA is on the menu as an intended “advertising” option, but not thought of as a PPC replacement at Google). Early last year I asked whether click fraud would accelerate the further development and mainstreaming of alternatives to PPC (they’ve always existed of course). Now we are seeing several developments that suggest that some of these other models will gain popularity and take hold.  […]

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