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Pay per click (PPC) is an advertising model used on search engines, advertising networks, and content websites/blogs, where advertisers only pay when a user actually clicks on an ad to visit the advertiser's website. Advertisers bid on keywords they predict their target market will use as search terms when they are looking for a product or service. When a user types a keyword query matching the advertiser's keyword list, or views a page with relevant content, the advertiser's ad may be shown. These ads are called a "Sponsored link" or "sponsored ads" and appear next to or above the "natural" or organic results on search engine results pages, or anywhere a webmaster/blogger chooses on a content page.

Pay per click ads may also appear on content network websites. In this case, ad networks such as Google AdSense and Yahoo! Publisher Network attempt to provide ads that are relevant to the content of the page where they appear, and no search function is involved.

While many companies exist in this space, Google AdWords, Yahoo! Search Marketing, and Microsoft adCenter are the largest network operators as of 2007. Minimum prices per click, often referred to as Costs Per Click (CPC), vary depending on the search engine, with some as low at $0.01. Very popular search terms can cost much more on popular engines. Arguably this advertising model may be open to abuse through click fraud, although Google and other search engines have implemented automated systems to guard against this.^[1]

Categories

PPC engines can be categorized into two major categories "Keyword" or sponsored match and "Content Match". Sponsored match displays your listing on the search engine itself whereas content match features ads on publisher sites and in newsletters and emails. ^[2]

There are other types of PPC engines that deal with Products and/or services. Search engine companies may fall into more than one category. More models are continually evolving. Pay per click programs do not generate any revenue solely from traffic for sites that display the ads. Revenue is generated only when a user clicks on the ad itself.

Keyword PPCs

Advertisers using these bid on "keywords", which can be words or phrases, and can include product model numbers. When a user searches for a particular word or phrase, the list of advertiser links appears in order of the amount bid. Keywords, also referred to as search terms, are the very heart of pay per click advertising. The terms are guarded as highly valued trade secrets by the advertisers, and many firms offer software or services to help advertisers develop keyword strategies. Content Match, will distribute the keyword ad to the search engine's partner sites and/or publishers that have distribution agreements with the search engine company.

As of 2007, notable PPC Keyword search engines include: Google AdWords, Yahoo! Search Marketing, Microsoft adCenter, Ask, LookSmart, Miva, Yandex and Baidu.

Online Comparison Shopping Engines

"Product" engines let advertisers provide "feeds" of their product databases and when users search for a product, the links to the different advertisers for that particular product appear, giving more prominence to advertisers who pay more, but letting the user sort by price to see the lowest priced product and then click on it to buy. These engines are also called Product comparison engines or Price comparison engines.

Some Online Comparison Shopping engines such as Shopping.com use a PPC model and have a defined rate card. ^[3] whereas others such as Google Product Search, part of Google Base (previously known as Froogle) do not charge any type of fee for the listing but still require an active product feed to function.^[4]

Noteworthy PPC Product search engines include: Shopzilla, NexTag, and Shopping.com.

Service PPCs

"Service" engines let advertisers provide feeds of their service databases and when users search for a service offering links to advertisers for that particular service appear, giving prominence to advertisers who pay more, but letting users sort their results by price or other methods. Some Product PPCs have expanded into the service space while other service engines operate in specific verticals.

Noteworthy PPC services include NexTag, SideStep, and TripAdvisor.

[edit] Pay per call

Similar to pay per click, pay per call is a business model for ad listings in search engines and directories that allows publishers to charge local advertisers on a per-call basis for each lead (call) they generate. The term "pay per call" is sometimes confused with "click to call"[1]. Click-to-call, along with call tracking, is a technology that enables the “pay-per-call” business model.

Pay-per-call is not just restricted to local advertisers. Many of the pay-per-call search engines allows advertisers with a national presence to create ads with local telephone numbers.

According to the Kelsey Group, the pay-per-phone-call market is expected to reach US$3.7 billion by 2010.

Pay per delivery (PPD)

A variation on pay per click used in email marketing, whereby email marketing campaigns are charged only on the basis of successfully delivered emails.