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.