Pay per click (PPC), also called cost per click (CPC), is an internet advertising model used to direct traffic to websites, in which an advertiser pays a publisher (typically website owner or a network of website) when the ad is clicked.

Pay- per- click is commonly associated with first-tier search engines (such as Google Adwords and Microsoft Bing Ads) with search engines advertisers typically bid on keyword phrases relevant to their target market. In contrast, content sites commonly charge a fixed price per click rather than use bidding system. PPC “display” advertisements also known as “banner” ads, are shown on web sites with related content that have agreed to show ads and are typically not pay-per-click advertising. Social networks such as Facebook and Twitter have also adopted pay-per-click as one of their advertising models.

However, website can offer PPC ads. Websites that utilize PPC ads will display an advertisement when a keyword query matches an advertiser’s keyword list, or when a content site displays relevant content. Such advertisements are called sponsored links or sponsored ads, and appear adjacent to above, or beneath organic results on search engine results pages, or anywhere a web developer chooses on content site.

The PPC advertising model is open to abuse through click fraud, although Google and others have implemented automated systems to guard against abusive clicks by competitors or corrupt web developers.

Pay-per-click, along with cost per impression and cost per order, are used to assess the cost effectiveness and profitability of internet marketing. Pay-per-click has a advantage over per impression in that it tells us something about how effective the advertising was. Clicks are a way to measure attention and interest. If the main purpose of an ad is to generate a click, or more specifically drive traffic to a destination, then pay-per-click is preferred metric. Once a certain number of web impressions are achieved the quality and placement of the advertisement will affect click through rates and the resulting Pay-per-click.

Pay-per-click is calculated by dividing the advertising cost by the number of clicks generated by an advertisement. There are two Primary models for determining pay-per-click. Flat-rate and bid-based. In both cases, the advertiser must consider the potential value of a click from a given source. This value is based on the type of individual the advertiser is expecting to receive as a visitor to his or her website, and what the advertiser can gain from that visit, usually revenue, both in the short term as well as in the long-term.