With the formation of the Internet, advertising campaigns went digital, producing embedded hyperlinks in banners and keywords directing traffic to the advertised site. It was during the 1998 TED convention that spectators witnessed the creation of pay-per-click advertising, or PPC advertising services, with Jeffery Brewer as its inventor.

Types of PPC

Websites appoint an spot for advertisers to plant their ads in. The website, recognized as the host, places the ads on their pages, and each occurrence in which the ad is clicked, the host gets money. In PPC search marketing, search engines use keywords and phrases to transport users to sites using the words and phrases advertisers bid on.

Utilizing the keyword or phrase, the search engine will place an ad on the side of their search results. These ads then appear on the right-hand side of the search engine, acting as an advertisement for a certain company.

The Cost Per Click

For each click on an advertisement, the website earns a set amount from the advertiser. A flat-rate or bid-rate model will determine the amount per click for each ad.

Flat-Rate Model

In a flat-rate model, advertisers spend a flat fee for each click, although the cost per click will vary with the content and where the ad placement is on the site. Websites also charge for the area of the ad, with larger fees for ads at the top than at the bottom. Advertisers target a select group; for instance, a video game website will target video game enthusiasts to lure customers to its site.

Bid-Rate Model

A bid-rate model forces several advertisers in competition against each other to plant advertisement on a host site. The website then places the ad in a distinct location on their website, charging advertisers per click. Advertisers who use a search engine PPC place bids on keywords instead of a webpage location. The same keyword becomes used by the search engine to conjure an advertisement next to the results page. Advertisers with the highest bid become placed at the top of the search results list and payment is made depending on the amount of clicks received per ad.