The new model takes pay-per-click, AdSense type web ads a step (or more) farther. These will be ads where payment comes only when the customer not only clicks, but actually does something – a purchase, a test drive, etc. (The NYT's story on the plan is here.)
Karp is right about this much, for sure: this changes things.
I'm no advertising guy, but my simpleminded analysis is that this will make advertising harder to sell, since it raises the bar about what gets paid for. If the ads have to show direct results, won't that make spamming or flashy "Click To Win!!" ads less productive?
Karp has a more developed view that comes to a different conclusion. Go read it here; for starters, this taste:
Of course, everything exists on a spectrum. Many [cost per click] ads will be placed next to high quality content and lead consumers to offers that they will genuinly find valuable. But that “lighter touch” publishing model isn’t what made Google the cash soaked monster it is. No, Google became big by giving “publishers” (i.e. people with no editorial goals, only profit goals) the tools to turn the web into a giant direct marketing machine.
If you think the web is filled with marketing now, you ain’t seen nothing yet. It will make you long for the days of network TV when you only had to sit through three minutes of commercials.
Google will also increase, by an order of magnitude, the pressure on advertising as a creative art, where it was once acceptable to waste half of a brand’s money. No, Google doesn’t profit from advertising. It profits from direct marketing, where the ends always justify the means.
I don't know why, but I feel less threatened by that kind of direct marketing free-for-all than from the contextualized, disintermediated advertising that defines today's web. In other words, if the web gets junkier and advertising spans wall-to-wall, wouldn't that drive people to higher quality sites? Anybody have an insight on this?