Introduction to Pay Per Click Advertising

PPC Advertising – Acronym for Pay-Per-Click Advertising, a model of online advertising in which advertisers pay only for each click on their ads that directs searchers to a specified landing page on the advertiser’s web site. PPC ads may get thousands of impressions (views or serves of the ad); but, unlike more traditional ad models billed on a CPM (Cost-Per-Thousand-Impressions) basis, PPC advertisers only pay when their ad is clicked on. Charges per ad click-through are based on advertiser bids in hybrid ad space auctions and are influenced by competitor bids, competition for keywords and search engines’ proprietary quality measures of advertiser ad and landing page content.

The Pay Per Click (PPC) Providers

Among PPC providers, Google AdWords, Yahoo! Search Marketing, and Microsoft adCenter are the three largest network operators, and all three operate under a bid-based model. Cost per click (CPC) varies depending on the search engine and the level of competition for a particular keyword.
But now also the social media players are moving in to take a part of this huge market. Facebook being the biggest challenger.

The Pay-Per-Click Advertising (PPC) concept

The concept behind Per-Click Advertising (PPC) is quite simple: Although the goal of search engine optimization is to rank "naturally" for a particular keyword, PPC marketing allows advertisers to bid against competitors for a particular keyword or key phrases. Advertisers can therefore pay to have their ad placed highest in the list of "sponsored links" or "paid listings" or "featured listings." These "sponsored results" typically appear at the top or on the right side of the search engine results page (SERP). Pay Per Click advertising search engines operate by making you bid on keywords that are related to your business.


Research has shown that having both high rankings in organic search engine results and having a high sponsored Google rank greatly increases the credibility of your business brand and in turn increases traffic to your business web site. Consider the search engine results page to be a prime piece of real estate with very high visibility. The goal of your online marketing campaign should be to get your business name, or your corporate brand name, on to that piece of real estate as many times as possible.

Google AdWords

Google AdWords is the largest and most used PPC advertising platform on the internet today. A Google AdWords account can be used to purchase pay per click advertisements on and the "Google Search Network," which is made up of several Google partner sites including,, Netscape and Excite. Advertisers bid to have their ads listed, and when consumers click on the ads, the advertiser pays the bid amount. Hence the term Cost Per Click, or (CPC).

Managing a PPC account is significantly time and labour intensive and must be maintained on a daily basis in order to grow and succeed. Several different PPC campaign strategies must be employed in order to find what works best based on your business needs. When properly implemented, all the available options of PPC advertising in combination with your organic traffic can help you capture all the available clicks for the keywords relevant to your business.

Whether you already have a PPC campaign underway or you are in the market to launch one, we have a pay per click service for you.

With search engines, advertisers typically bid on keyword phrases relevant to their target market. Content sites commonly charge a fixed price per click rather than use a bidding system.

Websites that utilize Pay Per Click Advertising ads will display an advertisement when a keyword query matches an advertiser’s keyword list, or when a content site displays relevant content. Such advertisements are called sponsored links or sponsored ads, and appear adjacent to or above organic results on search engine results pages, or anywhere a web developer chooses on a content site.

Although many Pay Per Click Advertising providers exist, Google AdWords, Yahoo! Search Marketing, and Microsoft ad Center are the three largest network operators, and all three operate under a bid-based model. Cost per click, varies depending on the search engine and the level of competition for a particular keyword.

The PPC model is open to abuse through click fraud, although Google and other search engines have implemented automated systems to guard against abusive clicks by competitors or corrupt web developers.

Determining cost per click

There are two primary models for determining cost per click: flat-rate and bid-based. In both cases the advertiser must consider the potential value of a click from a given source. This value is based on the type of individual the advertiser is expecting to receive as a visitor to his or her website, and what the advertiser can gain from that visit, usually revenue, both in the short term as well as in the long term. As with other forms of Internet marketing targeting is key, and factors that often play into Pay Per Click Advertising campaigns  include the target’s interest (often defined by a search term they have entered into a search engine, or the content of a page that they are browsing), internet (e.g. to purchase or not), location (for geo targeting), and the day and time that they are browsing.

In the flat-rate model, the advertiser and publisher agree upon a fixed amount that will be paid for each clicks. In many cases the publisher has a rate card that lists the CPC within different areas of their website or network. These various amounts are often related to the content on pages, with content that generally attracts more valuable visitors having a higher CPC than content that attracts less valuable visitors. However, in many cases advertisers can negotiate lower rates, especially when committing to a long-term or high-value contract.

The flat-rate model is particularly common to comparison shopping engines, which typically publish rate cards. However, these rates are sometimes minimums and advertisers can pay more for greater visibility. These sites are usually neatly compartmentalized into product or service categories, which allows for a high degree of targeting by advertisers. In many cases, the entire core content of these sites is paid ads.

Bid Based PPC

In the bid-based model, the advertiser signs a contract that allows them to compete against other advertisers in a private auction hosted by a publisher or, more commonly, an advertising network. Each advertiser informs the host of the maximum amount that he or she is willing to pay for a given ad spot (often based on a keyword), usually using on line tools to do so. The auction plays out in an automated fashion every time a visitor triggers the ad spot.

When the ad spot is part of a search engine results page, the automated auction takes place whenever a search for the keyword that is being bid upon occurs. All bids for the keyword that target the searcher’s Geo-location, the day and time of the search, etc. are then compared and the winner determined. In situations where there are multiple ad spots, a common occurrence on search engine results page, there can be multiple winners whose positions on the page are influenced by the amount each has bid. The ad with the highest bid generally shows up first, though additional factors such as ad quality and relevance can sometimes come into play (see Quality Score).

In addition to ad spots on search engine results page, the major advertising networks allow for contextual ads to be placed on the properties of 3rd-parties with whom they have partnered. These publishers sign up to host ads on behalf of the network. In return, they receive a portion of the ad revenue that the network generates, which can be anywhere from 50% to over 80% of the gross revenue paid by advertisers. These properties are often referred to as a content network and the ads on them as contextual ads due to the fact that the ad spots are associated with keywords based on the context of the page on which they are found. In general, ads on content networks have a much lower click through rate and conversion rate than ads found on search engine results page and consequently are less highly valued. Content network properties can include websites, newsletters, and e-mails.

Advertisers pay for each click they receive, with the actual amount paid based on the amount bid. It is common practice amongst auction hosts to charge a winning bidder just slightly more (e.g. one penny) than the next highest bidder or the actual amount bid, whichever is lower. This avoids situations where bidders are constantly adjusting their bids by very small amounts to see if they can still win the auction while paying just a little bit less per click.

To maximize success and achieve scale, automated bid management systems can be deployed. These systems can be used directly by the advertiser, though they are more commonly used by advertising agencies that offer Pay Per Click Advertising bid management as a service. These tools generally allow for bid management at scale, with thousands or even millions of Pay Per Click Advertising bids controlled by a highly automated system. The system generally sets each bid based on the goal that has been set for it, such as maximize profit, maximize traffic at break even, and so forth. The system is usually tied into the advertiser’s website and fed the results of each click, which then allows it to set bids. The effectiveness of these systems is directly related to the quality and quantity of the performance data that it has to work with – low-traffic ads can lead to a scarcity of data problem that renders many bid management tools useless at worst, or inefficient at best.


Reporting for campaigns will involve automated weekly snapshots and monthly in-depth reports that detail key metrics. The goal of these reports is to show continuing performance, growth, ROI and highlights. Reports can also be generated on-demand for custom time periods and long-term analytics, and will allow easy analysis and decision making.

The standard report format shows a comprehensive overview by country of basic ROI metrics such as Conversion Rate, ROI and CPC. Further details such as channel performance (Yahoo vs. Google vs. Bing) and actual keyword performance data are also given to provide comprehensive coverage of the campaign performance in the requested time period. Further details, such as click-path, negative keywords, ad copy quality and regional analysis are available as well.

Pay Per Click Management Pricing

For all Search Engine Marketing Campaigns, XIB Group. follows a traditional pricing model with a management fee as a percent of the month spend (10% to 20% depending on spend). We also have packages for flat fee models and performance models depending on the scope of the project and other services provided.



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