| Pay per click ( PPC ) is an Internet advertising model used on websites , in which advertisers pay their host only when their ad is clicked. With search engines, advertisers typically bid on keyword phrases relevant to their target market . Content sites commonly charge a fixed price per click rather than use a bidding system.
Cost per click (CPC) is the amount of money an advertiser pays search engines and other Internet> publishers for a single click on its advertisement that brings one visitor to its website.
In contrast to the generalized portal, which seeks to drive a high volume of traffic to one site, PPC implements so called affiliate model, that provides purchase opportunities wherever people may be surfing. It does this by offering financial incentives (in the form of a percentage of revenue) to affiliated partner sites. The affiliates provide purchase-point click-through to the merchant. It is a pay-for-performance model -- if an affiliate does not generate sales, it represents no cost to the merchant. The affiliate model is inherently well-suited to the web, which explains its popularity. Variations include, banner exchange, pay-per-click, and revenue sharing programs.
Websites that utilize PPC ads will display an advertisement when a keyword query matches an advertiser's keyword list, or when a content site displays relevant content. Such advertisements are called sponsored links or sponsored ads , and appear adjacent to or above organic results on search engine results pages, or anywhere a web developer chooses on a content site.
Although many PPC providers exist, Google AdWords , Yahoo! Search Marketing , and Microsoft adCenter are the three largest network operators, and all three operate under a bid-based model. Cost per click (CPC) varies depending on the search engine and the level of competition for a particular keyword.
In the flat-rate model, the advertiser and publisher agree upon a fixed amount that will be paid for each click. In many cases the publisher has a rate card that lists the CPC within different areas of their website or network. These various amounts are often related to the content on pages, with content that generally attracts more valuable visitors having a higher CPC than content that attracts less valuable visitors. However, in many cases advertisers can negotiate lower rates, especially when committing to a long-term or high-value contract.
In the bid-based model, the advertiser signs a contract that allows them to compete against other advertisers in a private auction hosted by a publisher or, more commonly, an advertising network. Each advertiser informs the host of the maximum amount that he or she is willing to pay for a given ad spot (often based on a keyword ), usually using online tools to do so. The auction plays out in an automated fashion every time a visitor triggers the ad spot.
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