Pay per click (PPC) is a Web-based advertising model typically used in advertising networks, search engines and content websites like blogs, where a payment is only made by advertisers when someone actually clicks on an ad to visit the website of the advertiser.
Generally, PPC advertisers have to bid on keyword phrases that are pertinent to their target market. Once a user keys in a keyword query that matches a keyword in the list of the advertiser or checks out a webpage that has relevant content, the advertisement of the PPC advertiser may be displayed.
Such advertisements are called sponsored ads or sponsored links. These ads may be displayed above or adjacent to the organic results on major search engine pages or simply anywhere a blogger or webmaster selects on a Web content page.
Unlike the generalized portal that seeks to drive extremely high traffic volume to a website, Pay per click implements an affiliate model, which offers buying opportunities wherever web users could be surfing. This is done by offering monetary incentives in revenue percentage form to affiliated partner websites.
The affiliates offer merchants a click through by means of a pay per performance model. This means that if an affiliate failed to generate sales, it is of no cost or fee to the merchant. Variations may include revenue sharing, PPC, and banner exchange programs. PPC advertisement is usually displayed by sites when a webpage exhibits relevant content.
Figuring Out Cost Per Click
There are two models used in determining the cost per click on an advertisement and these are bid-based and flat rate based. In both cases, the potential click value from certain sources should be considered by the advertiser. Normally, this value is according to the kind of audience the advertiser is targeting to have as a visitor on their website and what can be gained by the advertiser from that visit, typically revenue in short or long term.
Targeting is the key when it comes to any sort of advertising and that holds true for PPC campaigns as well. PPC includes the interests of the target audience. This is at times depicted by a search term entered in a search engine or web page content. PPC campaigns also include the intent of the target audience as well as the time and date they are browsing. Check out the eight steps to successful PPC campaigns from sitepoint to create your first successful campaign.
In this model, the publisher and advertiser agree upon a certain amount of money that will be paid for every click. In several cases, the publisher has a list or rate card listing the cost per click within various parts of their network or website.
Such amounts are at times associated to the content on the web pages, with those that usually attract more targeted visitors having higher cost per click than the content that only appeals to less valuable site visitors.
In many cases, however, the advertisers can bargain lower rates especially if they intend to commit to a high-value or long-term contract. PPC’s flat rate models are popular among comparison shopping engines that usually publish rate cards.
These rates though sometimes are nominal and advertisers are capable of paying more for superior visibility. These websites are often neatly compartmentalized into service or product categories, enabling high extent of targeting by PPC advertisers. In most cases, the whole core content of these websites is paid advertisements.
Bid-Based PPC Model
In this PPC model, a contract is usually signed by an advertiser. This contract will let the advertiser compete with other advertisers in an auction that is usually hosted by an advertising network or a publisher. Every advertiser is then tasked to inform the host about the maximum amount that he is willing to invest on a certain advertising spot (at times based on a keyword), using an online tool.
The auction is automated and often takes place when a searched keyword is being bid on. When the advertising space is part of search engine results page, the auction occurs whenever a bid is made. All bids for certain key terms that target the geo location, time and date a searcher looks up the web, are compared and a winner is chosen.
In circumstances where there are a number of advertising spots, which is a usual search engine results page occurrence, there can be a number of winners whose placement on the page are impacted by the value each has bid. Generally, the advertisement with the highest bid amount shows up first although some factors like relevance and advertisement quality can come into play sometimes.
Aside from the advertising spots on search engine results pages, major advertising networks also allow contextual advertisements to be placed on the properties of their third party partners. Basically, these publishers are those who have signed up to host advertisements for the benefit of the network.
They can get a commission or a portion of the advertisement revenue in return for their efforts. Commissions can sometimes go anywhere from 50 percent to over 80 percent of the total revenue that advertisers pay.
I hope now you have got a clear idea about PPC as well as its two different models. If you want to know the difference between the two different models of PPC, check out the difference between Flat Rate and Bid based PPC campaigns from Sitepronews.
What is your view about Pay per click? Have you used this online advertising strategy to drive traffic to your website?