Pay-per-action model for online advertising

  • Authors:
  • Mohammad Mahdian;Kerem Tomak

  • Affiliations:
  • Yahoo! Research;Yahoo! Research

  • Venue:
  • WINE'07 Proceedings of the 3rd international conference on Internet and network economics
  • Year:
  • 2007

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Abstract

The online advertising industry is currently based on two dominant business models: the pay-per-impression model and the payper-click model. With the growth of sponsored search during the last few years, there has been a move toward the pay-per-click model as it decreases the risk to small advertisers. An alternative model, discussed but not widely used in the advertising industry, is pay-per-conversion, or more generally, pay-per-action. In this paper, we discuss various challenges involved in designing mechanisms for the pay-per-action model, and approaches to tackle some of them.