What is Pay Per Click (PPC)

What is Pay Per Click (PPC)

 

Pay per click (PPC) also called Cost per click is an Internet advertising model used to direct traffic to websites, where advertisers pay the publisher called as website owner when the add is clicked. With search engines, advertisers typically bid on keyword phrases relevant to their target market. Most of the content related website owners pay a fixed price per click rather than use a bidding system. PPC advertisements are shown on web sites with related content that have agreed to show ads. This approach differs from the “pay per impression” methods used in television and newspaper advertising.

Pay per click (PPC) is one of those new internet technologies that you keep hearing about but most people do not understand. Simply, it is the advertising model used on the internet. Google started search engine advertising in December, 1999, and came online with its AdWords system in October of 2000. PPC was introduced in 2002, and until then advertisers paid on a cost-per-thousand impressions model. PPC gives you the power to reach the right customers at the right time when they’re looking for your product or service.

Mainly there are two primary models for determining cost per click :

1)      flat-rate

2)      bid-based.

Flat-Rate

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 Cost Per Click (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.

Bid-Based

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, usually using online tools to do so. The auction plays out in an automated fashion every time a visitor triggers the ad spot.

When the ad spot is part of a search engine results page (SERP), the automated auction takes place whenever a search for the keyword that is being bid upon occurs. All bids for the keyword that target the searcher’s geo-location, the day and time of the search, etc. are then compared and the winner determined. In situations where there are multiple ad spots, a common occurrence on SERPs, there can be multiple winners whose positions on the page are influenced by the amount each has bid. The ad with the highest bid generally shows up first, though additional factors such as ad quality and relevance can sometimes come into play.

The cost of PPC advertising varies according to the type of plan and the size of a company’s budget. However, by and large, the cost per click runs the gambit from 1p, 2p, 5p, 10p, 20p, 50p, all the way to £1 & £2. The PPC agency will match the company’s marketing budget with the appropriate cost per-click. Companies that have larger budgets will likely opt for a higher PPC cost whilst companies with lower budgets will opt for the lower cost. The cost per click determines the visibility the company’s ads receive on the internet. The higher the cost, the more likely the company’s ads will appear on high traffic websites.

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