What is Pay Per Click (PPC) And How Its Work?

Pay Per Click (PPC)

What is Pay Per Click (PPC) And How Its Work?

 

Pay-Per-Click (PPC)

An online advertising model in which an advertiser pays a publisher every time an advertisement is clicked.

Pay-per-click (PPC) is an online advertising model in which the advertiser pays the publisher each time an ad link is "clicked". Alternatively, PPC is known as the cost-per-click (CPC) model. The pay-per-click model is mainly offered by search engines (for example, Google) and social networks (for example, Facebook). Google Ads, Facebook Ads, and Twitter Ads are the most popular PPC advertising platforms.

How the PPC Model Works

The pay-per-click model is primarily based on keywords. For example, in search engines, online ads (also known as sponsored links) only appear when someone searches for a keyword related to the product or service being advertised. 

Therefore, companies that rely on pay-per-click advertising models research and analyze the most used keywords for their products or services. Investing in keywords can lead to a high number of clicks and, ultimately, high profits. (READY; Top Benefits of Program in Digital Marketing)

The PPC model is considered beneficial for both advertisers and publishers. For advertisers, the format is beneficial because it provides an opportunity to promote a product or service to a specific audience that is actively searching for related content. 

Moreover, a well-designed PPC advertising campaign allows the advertiser to save a large amount of money as the value of each visit (click) from a potential customer exceeds the cost of the click paid to the publisher.

For publishers, the pay-per-click model provides a primary revenue stream. Think about Google and Facebook, which offer free services to their customers (free internet searches and social networks). Online companies can monetize their free products using online advertising, especially the PPC model.

Pay-Per-Click Models

Typically, pay-per-click advertising rates are determined using a flat rate model or a bid based model.

1. Example of a flat rate

In a fixed rate pay-per-click model, the advertiser pays the publisher a fixed fee for each click. Publishers generally list different PPC rates that apply to different areas of their website. Remember that publishers are generally willing to negotiate on price. (READY; 7 Guide to Become a Digital Marketer For Beginners)

The publisher is more likely to lower the fixed price if the advertiser offers a long-term or high-price contract.

2. Sample tender

In a bid-based model, each advertiser bids the maximum amount they are willing to pay for an ad spot. Then, the publisher conducts the auction using automated tools. An auction is run whenever a visitor activates an ad area.

Note that the winner of the auction is generally determined by the level, not the total amount of money offered. The ranking takes into account the amount of money offered and the quality of the content provided by the advertiser. Therefore, the relevance of the content is as important as the bid. (READY; Top Benefits of Program in Digital Marketing )