Pay per action is a form of advertising pricing model that is extremely focused and advantageous for the advertiser. As it’s name suggests, the advertiser only pays when a prospective client takes a desired action.

This differs considerably from pay per click, or pay per impression. Those models can vary in their returns on investment. In the pay per click, the advertiser pays an agreed amount when a visitor clicks on a link. The Google AdSense model is a good example of this. The visitor to a web site sees the AdSense ads, clicks on one that appeals, and the advertiser is charged accordingly.

Also with AdSense on the content network an advertiser can choose to pay per impressions. This is usually measured in unit numbers of one thousand. The advertiser will pay an agreed amount per one thousand impressions the ad receives.

In both of the previously mentioned models, the amount thta the advertiser pays per click, or per impression when broken down, is usually quite small. Because of this, the advertiser can afford to have a click through rate of say, 3% to 5%. This means that most of the visitors do not take the desired action, but because the charge per click is low, there can still be a good return on investment. The same applies to pay per impression.

However, with pay per action the situation is quite different. Again, perhaps only 5% of the visitors who are exposed to the proposition may actually take up the offer - that doesn’t change - so the advertiser is asked to pay more for those who do. For this reason, pay per action will cost the advertiser more than each click or impression in the previously mentioned models.

Which works best? They all do in their own way. They all have their pros and cons and some advertisers prefer one over another for their own reasons. The pay per action model often appeals to advertisers as they only pay for guaranteed results. Granted, they pay a lot more each time, but the results are guaranteed - they only pay when a desired action happens.

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This entry was posted on Saturday, September 15th, 2007 at 6:04 pm and is filed under Pay-Per-Action. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.