Towards a pay-per-action model in sponsored search

Authors:
Mohammad Mahdian;Kerem Tomak
Affiliations:
Yahoo! Inc., Santa Clara, CA;Yahoo! Inc., Santa Clara, CA
Venue:
Proceedings of the ninth international conference on Electronic commerce
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 pay-per-click model. These pricing models aim to address two dimensions of an advertisers' objective function: brand awareness and sales generation. An alternative model, discussed but not widely used in the advertising industry, is pay-per-conversion, or more generally, pay-per-action. In this note, we discuss mechanisms for the pay-per-action model and various challenges involved in designing such mechanisms.