Zagat's, known for its restaurant guides, has successfully integrated Web 2.0 capabilities into its Zagat.com site--boosting subscriber conversions by 14 percent. The company already had a somewhat successful Web presence, with customers paying to read the company's restaurant reviews (and other entertainment-related information) on the site. But Zagat's figured that offering site visitors some free content (that they could obtain from other sites anyway) would help draw them to the paid offerings. It worked.

Zagat's VP of marketing, John Boris, recently shared details of the initiative with MarketingSherpa (www.marketingsherpa.com). Through surveys with existing subscribers, Zagat's determined that it would offer four free features: individual member reviews, member discussions, photographs of establishments and copies of restaurant menus. While these features were developed, Zagat's launched a Web marketing campaign to tout new site features. Visitors had to provide basic contact and demographic information in exchange for a user name and password.

The new community-based features have yielded Zagats.com more free users and more new subscribers. There has been a 45 percent rise in unique users and user sessions and a 20 increase in page views.

If traditional publishers think that the Web 2.0 revolution isn’t for them, they need to think again. Zagat's has shown that even one of the most traditional brand names in publishing can utilize the latest Web technology and generate traffic and revenues in the process. Connecting with customers has always been a challenge for companies; the Internet has gradually reduced the gap.

Many publishers were slow to embrace the Web; they shouldn’t delay this latest technological offering. Web 2.0 has taken customer communication to a new level--this is the best platform of personalization we’ve seen. Publishers who embrace it will undoubtedly build a strong bond with their customers--and it goes beyond just selling more subscriptions at the moment. By continuously gaining insights from customers, publishers will more easily (and accurately) learn what products and services they need to launch in the future to ensure long-lasting customer relationships.

This week Google announced the launch of a limited beta test of cost-per-action (CPA) advertising. CPA means that the advertiser only pays if the user takes a specific action pre-defined by the advertiser, such as signing up for a newsletter, downloading a white paper, etc. If CPA proves to be anywhere near as attractive to advertisers as cost-per-click (CPC) advertising has been, hold onto your hats, because this has the potential to re-shape the whole world of advertising yet again.

I have maintained for several years now that CPC advertising drove a huge shift in risk from advertiser to publisher. In survey after survey, we found advertisers using word like "fairness" to describe how they perceived CPC advertising. Advertisers said they were tired of what they saw as a "you pay your money and you take your chances" advertising model, and liked the fact that CPC advertising was both risk-free ... and fair.

Of course, as CPC evolved, advertisers quickly discovered that the only guarantee in CPC advertising was a click-through, and that's a far different thing from a lead or a sale. Throw click fraud into the mix, and CPC's reputation as a risk-free Nirvana for advertisers starting looking a little ragged on the edges.

Enter CPA. With measurement of performance under the advertiser's total control, it should be risk-free, fraud-free and produce a guaranteed and completely measurable ROI. What's not to like?

What's in it for Google? It appears that CPA advertising will be sold on a true auction basis, and since CPA produces guaranteed results, advertisers should be willing to pay more, a lot more. Also of interest, at least for now, CPA ads will only run on third- party sites in the Google network. Site owners will be able to pick and choose which ads to run. The ones that pay more are more likely to get selected, putting more pressure on advertisers to bid up their prices.

It's too early to predict if Google CPA will take off, especially with the structure of this beta launch, but the bigger issue is that CPA represents a further shift in risk from advertiser to publisher. What really concerns me is that we hear so many advertisers already talking about how they can't wait for CPS -- cost-per-sale -- also known as "I'll pay you if I sell something." CPS is a swamp for a lot of reasons, and it represents an unreasonable total shift of risk to the publisher ... and sorry Mr. Advertiser, that's not fair.

Labels: cost-per-action, CPA, google, online advertising