Exciting and/or scary news from the Google AdWords team - after years of speculation, Google is finally taking beta tester for cost-per-action (CPA) ads.

All of the test ads will be placed through AdSense and it sounds like both AdWords and AdSense advertisers will have a lot of control over the use and placement of CPA ads…which is good, since I could see a large amount of fraud cropping up with CPA based ads.

But wait a second…CPA is what the affiliate business is all about - what could Google be up to? Does this program signal Google’s entrance into the CPA, and therefore affiliate world? Is Google’s CPA program going to compete with the affiliate networks?

An interesting question - and I think the answer is yes. The economics are fairly simple. If Google charges a lower commission to merchants per action than the affiliate networks do (which isn’t hard to do since many networks charge steep commissions), and merchants share more revenue per action with affiliates through Google, I think many affiliates might be tempted to run CPA AdSense ads on their sites rather than CJ or Linkshare affiliate links.

Also, we all know that Google has traditionally had a love/hate relationship with affiliates…but I’m sure they realize how much money there is to be made in the affiliate space. So what if, and I’m getting a little tin-foil hatty here, Google started targeting affiliate sites for removal from AdWords and natural search, but magically, they wouldn’t target their CPA AdSense partners ads as an alternative? Google could, in effect, make it difficult and unprofitable for affiliates to do business with affiliate networks, and drive affiliates to becoming AdSense CPA partners.

**shivers**

Am I crazy for thinking this? Is this just Google-is-evil paranoia or is there something more to this? I’d love to hear the thoughts of the BUMPzee community, Scott, Barry, Shoe, Danny, Shawn, Jim and anyone else who has skin in the affiliate/search game. Feel free to leave a comment or post something about this on your own blog letting me know your thoughts.

And if you want to read a little more on the topic you can check out Barry’s post on Search Engine Land or read the AdWords blog post on the subject for a pretty in-depth explanation (but no mention of evil plans).

Oh yeah, if anyone gets into the beta and want to share their perception of the program, let me know.

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