Pay Per Click describes a type of advertising where you only pay when somebody clicks on your ad. Google may be the most well known company in pay per click advertising, but there are many others.

Who Invented Pay Per Click?

Bill Gross is generally credited with inventing Pay Per Click (PPC) advertising for his early search engine named Go To. When Gross started Go To in 1998, search engines that relied upon something other than human listings were just starting to take off. Gross started charging companies to advertise on his search listings and charged for each click, rather than by the impression, a revolutionary idea. Go To eventually became Overture and became an ad selling network for portal or search engine partners. It eventually was bought by Yahoo!

How Pay Per Click Works

There are only a few main parts to pay per click advertising. The following applies mostly to search engine advertising, but parts are true for all pay per click advertising.

  1. Keywords
  2. Ads
  3. Website Page
  4. Auction to determine who’s ad shows up

Bidding on Keywords

In the search engines, you select keywords that represent words people searching for your products or services would type into the search bar. You have to enter a maximum bid, which is the most you are willing to pay for one click from a potential customer. This is how you target your customers.

Creating Ads

Traditional PPC ads are text ads. Search engines wanted to keep things fast, and photos used to take a long time to load in the days before high speed connections. On some platforms, a photo can accompany the text ad. Just like any other advertising, your ad is designed to attack attention and make potential customers interested in what you are selling.

Website Landing Pages

When someone clicks on your ad they are directed to a page on your website. This is called the landing page. It can be the home page of your site, but it is better if it is more specific to what your ad is trying to sell.

The Modified Auction

In the early days, pay per click was not nearly as sophisticated as it is today. It was actually pretty simple. The company that was willing to pay the most for a click would always be in the top spot of the search result ads. This left deep-pocketed advertisers an opportunity to purchase the top spot for just about any keyword they wanted. But to make money as a search engine, people actually have to click on the ads. It is the only time the advertiser pays. They quickly realized that ads that were not related to the person’s search didn’t get clicked on nearly as often as related ads. This is where complexity entered pay per click and the reason it is important to do a very good job of matching up keywords, ads and landing pages when advertising on Google or Bing Ads today.Pay per click, on most platforms, no longer works as a straight auction, where the top bidding advertiser gets to have the top spot. A concept called Quality Score is used by both Google and Bing in determining which advertiser gets the top position and all additional positions. The factors involved in determining which location your ad will land include:

  • How well the keywords match your website landing page
  • How well your ad text matches your keywords and landing page
  • What kind of historic click-through-rate (percentage of times the ad gets clicked) your ad has
  • Your maximum bid per click

Quality Score and your bid are factored together and the search engine ranks the ads that could be shown in order. If you have a good quality score (relevance rating) and a high enough bid, your ad will be in the top position. Too low of a Quality Score or bid and your ad won’t show up at all.

Pay Per Click is a Complex World

There is no doubt about it, pay per click is pretty complex. It is much more difficult to understand and manage than traditional forms of advertising like the phone book or local newspaper. However, the results when it is done well are excellent. Fortunately, even small business owners don’t have to know much about pay per click to have success with it. Rather than trying to learn a very complex skill, the best solution is to turn to professional management.

Learn About Our Pay Per Click Management Services
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