Changing everything (again)

Eder points us to this post about CPA ads from Google.

Bottom line: in addition to buying clicks from Google, you can now bid on actions. Meaning sales, or sign ups. An action is worth 100 or 1,000 times as much as a click, so this means that a huge amount of the marketing risk is being transferred from the advertiser to Google or the affiliate.

A thoughtful profit-maximizer would buy every single bit of available inventory. Why not?

The challenge is thus on inventory. With such a low production rate (only one in ten thousand or a hundred thousand impressions pay off), the ads are more like lottery tickets for a typical website. The next step will be landing pages that are optimized for these actions. Example: company X does a bad job converting, so they start buying CPA ads. They pay, say, $100 an action. But media company Y figures out an efficient way to convert people. So they build pages that do this for say $50 each. They can scale and make money all day long being in company x’s business… without the pesky overhead.

Should happen pretty quickly.