Lead Quality of Google's Pay-Per-Action: Good or Bad?
June 25, 2008
It’s been a while since we discussed Google Adwords’ pay-per-action (PPA) beta test. There was much debate when PPA was launched last year. Some heralded PPA has the future of paid search, while others snubbed their noses and said it would never work. Since last year I’ve been experimenting with this new distribution option with varied results.
Recently, there have been reports that Google is deciding what to do with PPA: should it stay or should it go? Overall, I think PPA has done more good than harm for my accounts. The obvious benefit of PPA is that you only pay for actions (i.e. leads, sales, etc.). But the next question is, how qualified are these leads?
I will use one of my clients an example. We are generating conversions/leads, and by answering a few specific questions on my contact form, these leads qualify themselves as prospects (which means they are ready to purchase our product now). Obviously, leads are great, but we want more prospects who are ready to make a purchase now.
My average lead-to-prospect ratio for this client on the Google search network is approximately 53%, and my average cost-per-prospect is $14. The stats below are for my PPA campaign, date range of May 1 through June 23:
As you can see, my lead-to-prospect ratio (users who are ready to buy now) is approximately 13% lower than the search network average. However, my PPA cost-per-prospect is also lower. This leads me to believe that the traffic is slightly less quality (as my lead/prospect ratio is lower) but since my bid per-action is lower, I generate prospects at a lower cost, which is my end goal!
These 34 prospects are still in the sales cycle with my client so I am waiting for feedback in regards to the close rate for these prospects, as well as the amount of revenue they generated. The initial insight I received from the client is that they close “on par” with our other leads. So, right now I feel pretty good about this account’s PPA recent performance!
This doesn’t mean that PPA is all kittens and sunshine (of course not!). There is also a dark side to pay-per-action, such as:
- Building your performance takes a long time. Most of the PPA campaigns we’ve launched have taken months to finally gain some speed. Since publishers pick and choose which ads they want on their sites, it can take a while to build your traffic.
- Distribution is extremely temperamental. Your clicks/conversions can dry up at the drop of hat without any warning. We believe this is due to publishers adding and/or removing your ads from their site. So, PPA can be rocking your campaign one day, and disappear the next (we have seen this happen on at least 2 occasions).
- Lead quality is still undetermined. Yes, I am having moderate success with one of my clients but the jury is still out on the overall quality of the leads generated by PPA.
So, what does this mean for PPA and you? In summary, when PPA gains steam and actually generates leads, we have seen moderate success thus far. If you haven’t requested to be included in this beta, I say give it a shot. However, once you are seeing conversions from this lead source, make sure they qualified.
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