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In order to achieve a successful PPC program that delivers on your advertising needs on the Internet, it is important to understand the two primary ways in which PPC is determined in order to maximize your return on investment. Pay per click is calculated using either a flat-rate model or a bid-based model. The key is calculating the short and long-term value of each click from each PPC search engine promotion or the content location, such as a blog, website, or search engine.
The flat-rate PPC model involves a fixed amount for each click that both the advertiser and the publisher have agreed reflects the value within that PPC search engine promotion. Bid-based PPC is a competitive model that has each advertiser naming the maximum amount that they are willing to pay for a specific ad spot based on the keywords tied to that spot. This PPC auction occurs each time a search for those keywords is undertaken with the ad with the highest bid showing up farther up the page.