PPC, or “Pay Per Click” (also sometimes referred to as cost per click) refers to an online pay for performance advertising medium and is a popular form of online marketing.
Based on the search habits of the visitor, ads relevant to the search terms (keywords or phrases) are displayed on search engines and Web sites. When the visitor “clicks” on the ad, known as an “ad click,” they are redirected to a third-party website where they can purchase the advertised product or service. When visitors click on an ad, a software program tracks the number of hits the ad receives and the advertiser then pays the Web site owner or publisher a fee for each ad click, which is usually deducted from a prepaid account.
Search engine PPC advertising models generally rely on advertisers bidding on popular keywords which target the advertiser’s specific demographic, with the winning bids being ranked highest in the advertised search results. These ads are called “sponsored” ads or links, and display above the organic search results. Pay Per Click advertising has no effect on organic search results. Some websites also work off the sponsored link bidding system, but most content sites use a standard fixed-fee pricing model.
For content oriented Web sites, the site owner or publisher agrees to place an ad on their site for a predetermined fee, either a straight cost or some type or revenue share based on a percentage of the cost of the product. With the straight-cost option the Web site owner receives a set payment for each ad click; the more popular a Web site is the more the site owner can charge. However, with the revenue share model the Web site owner only receives a payment if a sale is made. If a sale is not completed, after the ad is clicked through, there is neither a cost to the advertiser nor revenue for the Web site owner.
PPC advertising can be subject to abuse, known as “click fraud,” if the software program is not sophisticated enough to track the location of each visitor. Because Pay Per click advertising on search engines can be quite competitive, cost per click ad fees can run anywhere from a few cents to a few dollars per ad click. Click fraud is most often found on the search engine sponsored ad link model, where unscrupulous competitors will continually click their competitors ads to intentionally run up their competition’s adverting costs. Fortunately, most of the larger search engines have developed programs to guard against click fraud.
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