Pay-Per-Click (PPC) Advertising
It is a form of online advertising in which those who manage websites pay for traffic routed to them, which happens when users click on links or banner ads.
These links appear as sponsored at the top, and sometimes on the right side as well, when a certain keyword or a definite set of keywords are queried for with the help of an internet search engine such as Google, Yahoo!, Bing or AOL. This is also called search engine advertising and can be useful because the ads are specifically directed at someone interested in that topic, category or product. It can also be financially worthwhile if a payment of say, $1 results in a $2000 sale, and so there is also intense bidding among websites to ensure that theirs is the first sponsored link that someone sees when he/she enters a keyword or a combination of keywords. The advertisers who pay lesser can still hope to get their links up, but these are displayed less prominently.
Banner ads are another mode of pay-per-click advertising – these are in the form of images placed on popular websites at locations where they are certain to grab attention. Clicking on these images takes the user to the advertiser’s website or a more focused link. An American advertiser and a Canadian advertiser can both place their ads at the same location, as ad servers ensure that a user in the United States (this is determined from the user’s IP address) sees the American advertiser’s banner while a Canadian user is exposed to the Canadian advertiser’s banner. However, this is dependent on the agreements the advertisers enter into with the website owner on whose site the banners are placed, and there is nothing to stop, say an international news service from advertising its portal to a global audience.
Pay-per-click advertising can also be done on Facebook, where a sponsored post containing a link can show up on the walls of a target audience. The cost-per-click is nothing more than the total advertising cost divided by the number of clicks. Because the number of clicks cannot be determined in advance, but the total cost is fixed, the cost-per-click is bound to vary.
There are also now mechanisms in place to prevent click fraud, which happens when unscrupulous competitors or their web developers try to drive up traffic to advertisers’ sites by tricking browsers into thinking there are clicks initiated by human users, when in reality these are the outcome of automated scripts, or in plainspeak, some really clever programming – this can fool advertisers into thinking their online campaign is effective and prompt them into increasing their advertising spend. All this does is to create financial losses for the advertisers, which is exactly what their competitors hope to achieve.