Google, Action Hero

It rolls out a pay-per-action ad model that could end click fraud.
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(GOOG) - Get Report

is experimenting with a new way for advertisers to pay for listings.

The company said late Tuesday that its new pay-per-action, or PPA, model allows advertisers to specify how much they would pay Google for attracting users who go on to do certain things at a Web site they find through a Google search. Actions that Google could be compensated for range from signing up for a newsletter to making a purchase.

The PPA system would build upon the highly popular pay-per-click, or PPC, system Google currently offers. In the PPC model, advertisers specify how much they are willing to pay for each user that clicks through to their site. In both systems, advertisers pay only for ads that are clicked on.

One appeal of the PPA model is that it could cut down on click fraud, where competitors click on links in order to drain advertising budgets.

Google's test is reportedly limited to about 75 Web sites and 75 advertisers thus far.

Google will likely display PPA ads in the order that generates the most revenue for it, by taking into account click-through rates as well as advertiser bids, much as it does with PPC ads.

But the new model also offers a broader appeal to many advertisers by introducing a new way to pinpoint exactly how much they spend on each sale.

Google is famous for pursuing many products at the same time. Still, the company generates virtually all of its revenue through online advertising. And it appears that the search giant is also thinking of new ways to increase the attractiveness of that service to advertisers while it finds its way into new markets.

In 2006, Google launched and

aggressively promoted its Checkout product, which lets users quickly find and buy products through a Google-run payment system. The system is intended to ultimately increase the value of Google's search ads to customers and drive further spending.

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