How Google's New Ad Format Can Help You Grow

This article was written by Derek Gehl of Entrepreneur.com. Derek is the CEO of the Internet Marketing Center, an Internet marketing firm that has helped thousands of people learn to start and run their own online businesses.

Whether you buy pay-per-click ads or get paid to place them on your Web site, Google (GOOG Quote) is beta testing an ad format that might change the way you do business. It's called pay-per-action or cost-per-action. The stakes are bigger, but at first glance it looks like the odds are better, too.

What's Different?

Instead of the regular pay-per-click model, in which advertisers pay every time someone clicks on their ad, pay-per-action charges only when someone takes a certain action after they've clicked through from an ad. The advertiser defines the action -- a purchase, newsletter subscription, page view -- and the price.

These ads cost more than pay-per-click. It's a lot tougher to get site visitors to buy or sign up than to click through to a Web site, so the people who publish the ads on their sites aren't going to see as much action in terms of revenue. And considering the ad publishers choose which ads they'll use, advertisers have to make the rewards worthwhile.

There are three ad formats: text ads, image ads and text links, a new format from Google that looks like a regular hyperlink. All of these can be integrated into a publisher's site, and publishers can also promote the ads. ...