Pay-Per-Click is a type of online advertising strategy that is used to create online traffic to particular websites. In Pay-Per-Click advertising, advertisers pay the site that hosts the service (webmasters), every time the advertisement is clicked. Most of the time, advertisement fee is set at a fixed-price.
As the PPC industry developed, a number of advertising networks were also formed which aimed to act as a medium between the webmasters and the advertisers. These intermediate site operators earn by having a part of the advertisement fee every time the add is clicked. CPC, or Cost-Per-Click, is the term used to describe the amount paid by an advertiser/merchant to the search engines and online publishers whenever their advertisement is clicked. Whenever a visitor clicks that particular advertisement, he is then directed toward the advertiser’s website. For an advertiser, the CPC that he has to pay depends upon two factors, the search engine that he uses and the amount of competition the keyword has.
Pay-Per-Click advertising started way back in 1998 when Goto.com company owner Jeffrey Brewer presented his pay-per-click concept to a TED conference that was done in California. Brewer’s presentation led to the creation of the pay-per-click advertising strategy. However, despite being the one to present the concept, credit for it and the PPC model is given to Bill Gross, Goto.com and Idealab founder.
Pay-Per-Click advertising makes use of the affiliate model. This kind of model offers financial bonuses (most commonly percentage revenues) to affiliate, or partner sites. If a partner site is unable to create sales, the merchant will not have to pay anything. This is why the affiliate model is also known as the Pay-Per-Performance model.
Of all the Pay-Per-Click providers, Microsoft adCenter, Google AdWords and Yahoo! Search Marketing are the largest operators.