Google is testing, on a limited basis, a pay-per-action ad form that ties publisher payment to a specific action by those who click the ad, reports ClickZ.
Advertisers define the action - an actual sale, signing up for more information or something else - and the publisher on whose site the ad appears would be paid only when that action is completed. Though that means publishers don't get paid as frequently as in pay-per-click ads, the PPA model usually results in higher single payments.

Publishers will have more flexibility in choosing the ads that run and in encouraging visitors to take action on the ad. That sort of encouragement has been forbidden by Google as part of the AdSense terms of service (TOS) for other ads.

Michael Arrington at TechCrunch points out that a move to PPA model lowers advertisers' potential exposure to click fraud, since they would only pay when a specific action is taken and not when an ad is clicked (a click is easily automated). He also predicts that this will have a severe and negative impact on ad networks already operating on a PPA model simply because they can't compete with Google in terms of scale of reach.

Arrington also catches a smaller announcement in the Google AdWords blog post announcing the PPA test. Google will begin testing in-text ads, similar to those already offered by Intellitext and others. When visitors to a site running these sorts of ads mouse over the linked text, a box appears with the ad displayed along with "Ads by Google" text.

This would be the first ad offering by Google to break out of the separate ad box and into the text of the site's content.