Understanding Pay-per-Click Systems - Determining The Cost

Pay-per-Click or PPC belongs to the most attractive and effective techniques of internet marketing. It offers an advertiser a reasonable billing system, when he only pays for the actual clicks and real traffic to the target website; and the publisher receives broader range of advertisers, allowing him to display ads relevant to the content of the source web pages.

 

In order to estimate the financial benefits of PPC internet marketing, it is important to understand two basic approaches to defining the cost of every click. This knowledge will later help you understand how much you will have to pay for every click on your banner or advertisement and evaluate the real benefits of your internet marketing campaign.

 

So, the first approach is called flat-rate PPC. It means that there is a fixed amount of money that an advertiser will have to pay a publisher for every click made by visitors on his ad or banner. The flat rate may depend on multiple factors: for example, the location of banners or ads (those published at the home page are considered to be more valuable and thus more costly).

 

The second approach in PPC internet marketing is called bid-rate PPC. In this case, there exists a kind of auction, where advertisers can place bids for a click at a definite ad spot, which is commonly based on the keyword. Here the keyword competitiveness plays a key role, because there is usually a great competition among ads, targeted at the highly popular keywords. For example, if you want Google Adwords to display your ads in the search engine results page, when people search for “weight loss”, you are likely to compete with other advertisers, who are also interested in the same keyword.

 

That is why, it is recommended to use all the available features to maximize the targeting of your ads, such as geographic targeting. For example, if you are selling bedroom furniture in Arizona, it is, perhaps, no need to compete for the ad spots in Australia and pay for the clicks from there.