Where is Google going to stop?

I got this email from my manager the other day ” Not sure if you are all aware of the latest beta out of Google – CPA (cost per action) based advertising.” as a forum freak I was aware of the fact and already had some initial thoughts about the all thing.
To me it was the next logical step for Google.
Search affiliates represent between 35 and 80% of affiliate business depending on the network. In the UK only affiliation should generate £1.2 billion revenue by the end of 2006, so of course Google wants a part of the pie. They will advertise it to their users and advertisers best interest. CPA is the most “secure” way to avoid traffic fraud and abuse, of course you can still place an order under a false credit card number or cancel the order as soon as it’s placed but we can agree it is going to be more difficult to be dishonest and earn fraudulous money.On the other hand if everyone is pushing CPA, it will be really hard in the nearest future to push Brand recognition on line, plus some brands are using search to make indirect sales so the model should be teamed up with a cost per call function.Plus all merchants do not have a “sales driven” website so “affiliates” will be tired of driving traffic to non converting sites.This initiative is aimed at “killing” affiliate networks and if handled properly Google can be really successful at this as we could also think of them proposing tutorials, workshops, roundtables ect.. around how to drive search affiliate marketing and how to make the most out of it.On the merchant side, “Google Affiliate” and “Google Analytics” can be used together to understand the purchase path and behaviour of their customers.

It will also “force” genuine affiliate networks to empower their non search affiliates and come back to what affiliation marketing was about to start with, find creative ways to generate sales and get commission. In the last 3 years they all been “winging” about growing dependency on search but none of them actually did something about it.

Question is, how successful it will be amongst affiliates themselves? Affiliates do not see Google as a partner but they cannot avoid it, it is a love/hate relationship, they love the money but hate the model (no transparency, rules are changing all the time, blacklisting, some merchants are breaking the rules without being punished but smaller merchants are strictly monitored…), the vast majority of affiliates may not like the fact that 90% of the business is in the hand of Google and must abide Google rules. So far Google is only beta testing it so we do not know how successful the program will be. A good idea does not always equate market share gain, it will take Google a couple of years to close the gap with CJ, TD and alike.

-PPC: If Google is pushing CPA, they will have to think about an hybrid model, small amount per click and big amount per sale, otherwise they will not attract any affiliates.
-Affiliation: To be honest have Google to manage paid search affiliates will ease affiliation management as Google would monitor rule breakers and select affiliates according to their potential earnings. Affiliate networks will also concentrate on recruiting more non search affiliates. They would also lower their cost to keep their existing clients and as Google may offer consultancy as part of their package (at the end of the day they need to offer more if they want to compete), affiliate networks will have to adapt.
It would be interesting to know what will be said about it in the next affiliate summit in Orlando.