Pay per Click (PPC) Management

Pay per click is an advertising model that pays host websites every time a visitor clicks on one of the ads on the page. This tool is used to drive traffic to a website. Advertisers bid on keywords and phrases that people use in search engines that lead to the advertiser's website. Websites typically charge a fixed price per click, but there are some that use a bidding system. Pay per click is reminiscent of the pay per impression method of advertising used in newspapers and television.

Pay per Click Ads

Based on the keywords used in the search engine, a specific ad aimed at the current visitor will pop up on the website. This is an affiliate model and enables purchase opportunities wherever the visitor is searching. Other affiliate models are banner exchange and revenue sharing programs.

Cost per Click Models of PPC

Websites can choose between two main models of pay per click payments; flat-rate and bid-based. When considering PPC, be sure to accurately estimate the potential value and gain received. This will help determine which option is best.

Flat-rate PPC

Flat-rate models involve the advertiser and publisher coming to an agreement on the fixed amount paid for each click. Publishers have rate cards that list the amount of traffic each portion of the website receives; the higher the traffic, the higher the cost per click. Higher traffic is usually due to better or more content on that portion of the site. A good example of flat-rate PPC sites is a comparison shopping engine that compares the online and listed prices of specific items. These sites are highly specialized because users choose one or two specific items. This allows advertisers to reach a highly targeted portion of potential customers.

Bid-based PPC

Bid-based PPC is like an auction, where advertisers place a maximum bid in a private auction hosted by a publisher or an advertising network. With each bidder's maximum bid placed, the auction plays out automatically each time someone clicks on an ad spot. Advertisers pay per click on the auctions where they are the highest bidder. The three largest PPC networks, Google AdWords, Yahoo! Search Marketing and Microsoft adCenter, all operate on a bid-based model.

As with any advertising model, the benefits must outweigh the costs, time and energy. Bid-based models are often highly competitive and therefore may be cost prohibitive to some smaller start-ups. Both models can be an effective method of advertising because there is typically no charge to the advertiser unless someone clicks on the ad. Therefore, the advertiser enjoys exposure to many potential and future customers in a highly targeted environment but without paying any money if the ads aren't effective.