Google Moves Away from Clicks with ‘Pay for Conversions’ on GDN

At the end of last week Google matter of factly introduced “Pay for Conversions” for display campaigns on GDN. On one level this is merely another “CPA” bidding option for marketers:

Starting today, you can choose to pay for conversions, rather than clicks, when using Display campaigns. Paying for conversions means you only pay when someone converts on your website or app – and you’ll never pay above your target cost per action (CPA).

Let’s say your target CPA is $10, and you drove 30 conversions over the weekend. You’ll pay exactly $300, with an actual CPA of $10. You won’t be charged for clicks or impressions.

However it’s significant as the expression of two larger trends:

  • Part of a continuing move by Google away from clicks and impressions toward more meaningful outcomes
  • Another example of how machine learning/optimization and automation are reshaping digital advertising

The move toward conversions and away from clicks is consistent with what many customers, including SMBs, are seeking. The recent State of Local SEO report from Moz showed that, in terms of measuring ROI, more marketers and their customers (large and small) are increasingly focused on conversions and revenue, rather than rankings and traffic.

Universal App Campaigns is the precursor and model for most of Google’s new automated ad products, including Responsive Search Ads, Smart Shopping Campaigns, Smart Campaigns and Local Campaigns (which are designed to generate store visits). A/B testing and optimization are managed by the system. In theory this should work better for both advertisers and for Google.

With the new Pay for Conversions bidding there are some caveats and limitations however. Google requires at least 100 conversions in the past 30 days to be eligible. It doesn’t appear to work for offline conversions at this point. Explicitly excluded are call-based conversion tracking and Salesforce CRM data.

Facebook has lead the way with objective-based ads and Google followed. GroundTruth, Blis and the now-shuttered Retale introduced pay-per-visit advertising on mobile roughly a year ago. This is the direction the overall market is going; and with store visits tracking and CRM/POS data that can be matched to online ads and visits it’s technically feasible.

I suspect Pay for Conversions will find its way into Local Campaigns and be extended to more ad and advertiser categories in the near future. It makes sense when you consider that when retail and service-based purchases are combined, it’s well over 90% of consumer transactions that happen offline.

At LSA19 we have a session called, “The Future of Ads Will Be Automated” about how AI and machine learning are rapidly changing digital marketing and the staffing implications for agencies and media companies in the next 3 to 5 years. 

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