Google Tests Cost-Per-Action Ads

In an attempt to protect its advertising partners from click fraud, Google is testing a new type of online ad that would only charge the advertiser when a user performs a certain action. This would assure advertisers that they are getting a return on their investment, while weeding out false clicks.

Click fraud occurs when a person displaying advertising on their pages either manually or automatically clicks a link repeatedly in order to generate revenue. The advertiser is then forced to pay for these false leads.

The Mountain View, Calif.-based company has been testing out the new system with a small group of advertisers, which has been expanded as the test continues. The new program is apparently not intended to replace the pay-per-click system; rather, it would be offered as a separate option.

Its likely that the new ad type would sell at a higher price than the traditional ads, as it would take more impressions to create a chargeable click. However, it also poses the risk that as more companies transition to the new system, ad revenues at Google could fall as a result.

Google does stand to benefit from the switch. The company has already been the focus of a "click fraud" lawsuit, which it attempted to settle in March of this year. Showing its detractors that it is addressing the problem could ward off future lawsuits.

Also, in separate news, Google announced a partnership with Adobe to bundle the Google Toolbar with some Adobe products. Details on the agreement were scant, and the exact time frame and financial terms not disclosed.

Initially, the Google Toolbar will be shipped with Adobe's Macromedia Shockwave product.