Pay Per Click (PPC) is a revenue sharing Internet marketing system between a website owner and an online business venture, in which the online business places advertisements of its products and services on the partner’s website, in exchange for a fixed share of profit. In this type of online marketing arrangement, advertisers pay to their host only when their ad is clicked by the net user or online customers.
Pay Per Click (PPC) is a type of affiliate marketing service. This novel concept of pay per click advertisement was founded by Bill Gross in 1998, who also founded idealab.com and Goto.com. In PPC, whenever a net visitor or potential customer goes to the merchant’s website by clicking on the ad or on the link displayed on the affiliate’s website, a certain amount of money is transferred into the affiliate partner’s account.
The basis of revenue sharing or commission of affiliate for PPC is decided through Cost per click (CPC) concept. CPC is the amount of money an advertiser transfers to the account of affiliates like search engines and other Internet publishers, for every click on its advertisement displayed on the affiliate’s website that brings one visitor to his website.
Normally all of the content based sites commonly charge on the basis of a fixed price per click rather than use a bidding system. In case of search engines, advertisers or online merchants usually bid on keyword phrases relevant to their target market segment. For example Microsoft adCenter, Yahoo! Search Marketing and Google Ad Words, which are the three largest network operators, operate under a bid-based model. The rate of Cost per click (CPC) varies depending upon the search engine and the competition level for a particular keyword. Keywords that are used quite frequently by search engine users cost much more on a per click basis than the infrequently used keywords.