As with many emerging
technologies, PPC are known by several different names and acronyms. Some
people call it Pay Per Placement engines (PPP), others call them Bid for
Placement engines, and the list goes on.
The industry is now trying to standardize on "Pay Per Click" as the official
terminology. The reasoning goes that you do not actually pay for placement.
Technically, the positions or listings are free. You pay only for each click
(i.e., visitor) that you receive from that search engine listing. The person
placing the highest bid per click price for a keyword achieves the highest
placement or ranking.
The advantage of PPC's over paying for banner ads is that you do not pay for
impressions displayed, but instead for actual click-throughs. With banners,
you could purchase 1,000 impressions for $40 and receive only 20 clicks,
costing you a whopping $2 per visitor. In general, there's no guarantees how
much you'll pay per visitor acquired with most forms of advertising. TV,
radio, magazines, and others normally force you to bear all the risk. You
must create ads and pick advertising locations that will be cost-effective
for your business.
Even though PPC cannot guarantee you'll make a profit, it does offer you
significantly less risk than many other forms of advertising. It's also
commonly known that visitors from search engines (PPC or otherwise) are much
more likely to purchase products or services than visitors derived from
traditional ads. Search engines provide you with highly targeted visitors.
Each click in theory comes from someone who was actively looking for your
products or services.
Paying as little as 1 cent per visitor is dirt-cheap. If you can't make a
profit paying 1 cent per visitor, then you may be hard pressed to find many
advertising options that will work for you.