What is Pay Per Click

Pay per click (PPC) is an advertising technique used on websites, advertising networks, and search engines.

Advertisers bid on "keywords" that they believe their target market (people they think would be interested in their offer) would type in the search bar when they are looking for their type of product or service. For example, if an advertiser sells red widgets, he/she would bid on the keyword "red widgets", hoping a user would type those words in the search bar, see their ad, click on it and buy. These ads are called "sponsored links" or "sponsored ads" and appear next to and sometimes above the natural or organic results on the page. The advertiser pays only when the user clicks on the ad.

While many companies exist in this space, Google AdWords and Yahoo! Search Marketing, which was formerly Overture, are the largest network operators as of 2006. MSN has started beta testing with their own PPC services MSN adCenter. Depending on the search engine, minimum prices per click start at US$0.01 (up to US$0.50). Very popular search terms can cost much more on popular engines. Abuse of the pay per click model can result in click fraud.

Categories
PPC engines can be categorized in "Keyword", "Product", "Service" engines. However, a number of companies may fall in two or more categories. More models are continually being developed. Currently, pay per click programs do not generate any revenue from site traffic to sites using these programs. Only when visitors click on banner advertisements or pop-ups is revenue generated.

Keyword PPCs
Advertisers using these bid on "keywords", which can be words or phrases, and can include product model numbers. When a user searches for a particular word or phrase, the list of advertiser links appears in order of bidding. Keywords, also referred to as search terms, are the very heart of Pay per Click advertising. The terms are guarded as highly valuable trade secrets by the advertisers, and many firms offer software or services to help advertisers develop these invaluable words.

As of 2005, notable PPC Keyword search engines include: Google AdWords, Yahoo! Search Marketing (formerly Overture), GaZabo.com, Microsoft adCenter,LookSmart, Miva (formerly FindWhat), Ask Jeeves, 7Search, Kanoodle, and Baidu.

Product PPCs
"Product" engines let advertisers provide "feeds" of their product databases and when users search for a product, the links to the different advertisers for that particular product appear, giving more prominence to advertisers who pay more, but letting the user sort by price to see the lowest priced product and then click on it to buy. These engines are also called Product comparison engines or Price comparison engines.

Noteworthy PPC Product search engines are: NexTag, PriceGrabber.com, and Shopping.com.

Service PPCs
"Service" engines let advertisers provide feeds of their service databases and when users search for a service offering links to advertisers for that particular service appear, giving prominence to advertisers who pay more, but letting users sort their results by price or other methods. Some Product PPCs have expanded into the service space while other service engines operate in specific verticals.

Noteworthy PPC services include NexTag, SideStep, and TripAdvisor.

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