Pay Per Click (PPC) Introduction

Pay per click advertising also known as “PPC” or “CPC” which stands for cost per click, is a form of advertising on the Internet. The PPC advertising system is a method used to drive users to specific websites. This is done by advertisers creating and submitting web advertisements to a network and then paying the network every time someone clicks on their ad. A very popular platform for PPC is on search engines. Search engine pay per click is a procedure where advertisers bid on keywords and phrases that are related to the product or service that they are promoting. There are a variety of methods for buying and selling promotional space on the Internet. Some networks and websites use a fixed rate model where the price of every click is predetermined and others use an auction system where the price of each click is a product of the highest bidder. 

PPC “Content Ads” also known as “Display Ads” are advertisements that appear within websites that have a contract to show ads. These ads can be image or text banners and are usually positioned on websites of relevant content. Often display ads are bought and sold using a “CPM” model. CPM stands for Cost Per 1,000 impressions, M is the Roman Numeral for 1,000 and an impression is when your ad is shown. Therefore if you buy media with the CPM model you will pay each time your ad is shown 1,000 times.

Display Networks or Content Networks are comprised of numerous websites that opted into their network looking to offer ad space for a fee. The websites that are a part of the display network will present an ad on their website that is related to the material on the website or related to the browsing and search history of the visitor, depending on the complexity of the display network.

Embedded advertisements are known as sponsored ads or sponsored links. Sponsored links can appear anywhere a website owner chooses within their content, although it is frowned upon to mislead website visitors into clicking on a sponsored ad. Within search engines sponsored links typically appear alongside or on top of the search results. Search engine search results that do not include sponsored links are referred to as “Organic Results” or “Natural Results”.

The industry leading PPC platforms are Google AdWords and Microsoft adCenter, Microsoft adCenter also manages ads within the Yahoo search engine. These two PPC giants for the most part utilize an auction based keyword bidding system.

In an Auction based system advertisers purchase each click, as long as they have set a high enough bid to suppress the competition, at no more than the maximum bid they specified. Google and the largely developed platforms have established a standard process that charges the top bidder a little bit more than the second top bidder. Currently Google tends to charge the highest bidder one cent more than the next highest bidder. The bidding process of paying slightly higher than the nearest competitor alleviates much of the tedious micro managing amongst advertisers and allows the network to quickly capitalize on competition with their automated system.

This is a basic introduction to Pay Per Click advertising, lots more to come.

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