How does the Google Pay Per Click & other Models Work?
Now that you know what is Google pay per click and others like them, let’s find out how the PPC model works.
Pay-per-click advertising relies heavily on keywords. Online ads (also known as sponsored links) only appear in search engines when someone types in a keyword related to the product or service being advertised. Companies that rely on pay-per-click advertising models research and analyze the keywords most relevant to their products and services. Investing in relevant keywords can result in more clicks and, eventually, more profits.
PPC is considered to be a beneficial model for both advertisers and publishers. Advertisers benefit from the model since it offers the opportunity to reach a targeted audience of people who are actively searching for related content. Moreover, a well-designed PPC advertising campaign can save an advertiser a considerable amount of money, as the value of every potential customer’s visit (click) exceeds the cost of the click paid to a publisher.
Publishers rely heavily on the pay-per-click model to generate revenue. Consider Google and Facebook, which offer their customers free services (free web searches and social networking). Using online advertising, especially PPC, online companies are able to monetize their free products.
Google Pay Per Click (and other PPC) Models
A flat-rate or a bid-based model is commonly used to determine pay-per-click advertising rates.
- Flat-rate model
In the flat rate pay-per-click model, advertisers pay publishers a fixed amount for each click. Most publishers keep a list of different PPC rates for different parts of their websites. Most publishers are generally open to negotiating the price. If an advertiser offers a long-term or high-value contract, a publisher is likely to lower the fixed price.
- Bid-based model
In the bid-based model, each advertiser submits a bid with a maximum amount they are willing to pay. The publisher then conducts an auction with automated tools. A visitor triggers an auction whenever he or she clicks on an ad spot.
A winner of an auction is generally determined by the rank, not the total amount of money offered. Advertisers are ranked based both on the amount of money they are offering and the quality of the content they are offering. The relevance of the content is just as important as the bid amount.
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