For almost as long as Pay-Per-Click was a thing, we have been talking/dreaming about Pay-Per-Conversion. Take a look at this 13-year-old quote (taken from this brilliant Economist article, one of the best PPC articles I’ve ever read) from way back in July 2006:
… the “Holy Grail” of advertising (is) the complete elimination of Wanamaker waste. He calls this cost-per-action, or CPA, although he means cost-per-sale, and says that it “just makes too much sense” not to catch on. His start-up this time is called Snap.com, a small search engine. An airline, say, that advertises on Snap’s search results would pay not when a consumer clicks on its link but only when he buys a ticket. Google, which is researching almost all conceivable advertising methods, also has plans for CPA.
The man being interviewed for the article is Bill Gross – and it is fair to say he pioneered pay-per-click advertising back in 1996 and planted the idea of AdWords into the minds of Sergey Brin and Larry Page, the co-founders of Google, when he met the duo in 2001. Sadly, Snap.com, like most other search engines, couldn’t take on Google and the platform ceases to exist. But the idea of risk-free “pay per conversion” marketing persists and for most marketers, it has never stopped being the “Holy Grail of advertising”. The question has always been: why would Google ever back it, as they make so much money from the Pay-Per-Click model? Now it seems that Google Ads are tentatively backing Pay-Per-Conversion, as a means to get more people using display.
As the name suggests, the beauty of Pay-Per-Conversion is that all the clicks and impressions are completely free – you only ever pay when you get a conversion. In theory, you could get a million clicks to your website and never pay a penny.
Looking at the example below, which was for an e-commerce website and was taken over 30 days, we can see how devastatingly effective Pay-Per-Conversion can be. 10,756 clicks and over 3.75 million impressions – all free – generated 349 conversions. Each conversion cost £8.30 each for a total spend of £2,895.78, but crucially £18,633.68 in revenue was generated for a staggering ROI of 543%.
Here’s another test I’ve been running. Once again, the results are very impressive. In the first 7 days since Pay-Per-Conversion bidding was applied to a display campaign with manual CPC bidding and a very low Max. CPC cap, clicks increased by 60% and conversions increased by 30% while at the same time spending 42% less than before. In short, we got a lot more with a lot less money!
There doesn’t seem to have been much of a fuss about Pay-Per-Conversion Smart Display, which is strange. While the eligibility threshold has been discreetly lowered recently (suggesting that Google wants to increase the uptake), the lack of publicity coupled with the fact that these campaigns are hidden and difficult to find in the Google Ads interface could mean that the future is uncertain for this brave new advertising model. Our advice to you is to, enjoy all those lovely free clicks and impressions while you can! If you only ever pay when you receive a sale or a lead, what have you got to lose?
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