Some hosting companies have cited AdWords “click inflation” – the rising cost of keywords – as a motivation for shifting their focus to affiliate marketing, where each payout produces a customer (rather than a web site visitor). In many ways, the hosting industry provides a textbook study of the effectiveness of the auction-based AdWords system in maximizing profits for Google. The large volume of hosting advertisers creates competitive bidding for desirable hosting-related keywords, driving costs higher.

It’s too early to say whether that pattern would hold true for Google’s PPA program. But PPA ads also have the advantage of eliminating click fraud as an expense for advertisers and a quality control headache for Google, since only signups generate a fee and bogus clicks have no value. While Google has consistently stated that the incidence of click fraud is extremely low, reports of ad-clicking botnets persist as well.

Some hosting marketers link the upward trend in affiliate fees to the growth of hosting “top 10” sites that guide web searchers to hosting providers. Since the top-ranked sites are generally those with the highest affiliate payout, a hosting company offering a generous referral fee can quickly gain visibility atop the rankings.

But one authority on search believes Google’s pay-per-action program could alter the quality of content in affiliate networks. “If they push this as hard as they did AdSense or search it is going to teach advertisers and publishers to create efficient conversion oriented content and sales funnels,” writes Aaron Wall of SEO Book. “It will fundamentally change the structure of the web.”