The pay per click system is an internet based affiliate advertising model in which the affiliates are websites or pages that act as publishers for the ad providers based on a click of the mouse rate. There are two basic variations of the advertising model, known as the flat rate model and the bid based model. The two largest publishers are search engine results pages and content networks. Much of the value of the internet based economy is derived out of this marketing system.
This recently created robust segment of economic activity based on the internet sprang out of what was primarily a source of information and entertainment less than a decade ago. The marketing system which has greatly contributed to this economy is organized on the frequency of user hits on sponsored link ads.
Affiliate sites such as content providing sites or search engine results pages are the ad displayers known as publishers which work in an automated fashion to display information based on keywords. When someone types keywords into a search engine or clicks on an ad linked to a central website this per click system comes into play. In general, fees are paid to the publishing site according to the amount of keyword hits.
The flat rate model is one method used to set the cost per click rate. Usually the rates are set by agreed upon valuations of the content on a site according to the number of hits received. Providers may be able to negotiate rates by signing a term length contract or the rates may be dictated by a rate card.
The bid based model is the other way that rates are determined. The rates in this model are set using automated transactions which place ads in search engine results according to rates associated with keywords on which the providers have placed bids. The bid values are constantly adjusted by the automated processes, and the advertiser pays the bid amount when the user clicks on an ad.
As a general rule, more online traffic is created by search engine keyword searches than by sponsored ad links because most computer users first action when looking for information is a keyword search. For this reason, rates are usually higher for search engines results pages than the rates set for ad hosting sites.
The locations where ads are posted include web sites, newsletters, blogs and emails. These may be independent sites offering focused content or content networks, collections of sites run by a common owner whose ads are placed by the providers based on keywords present in the content or by the general page content. The ad hit turnaround for sponsored link ads is normally less than that derived from search engines.
The system of pay per click has already proven its worth in the short time it has existed on the internet. Not only has this model shown its usefulness in directing traffic to advertisers, it has also helped the internet to develop as a vibrant area of economic growth. Applying the unique method of pairing keywords to ad revenue, this system has allowed the growth of both businesses with a presence in the physical world and those existing in cyberspace.
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