How Does Pay-Per-Click Advertising Work?


Quick Answer

Pay-per-click advertising works by charging advertisers only when users click their ads. One of the most common forms of pay-per-click advertising includes the ads displayed along with search engine results

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How Does Pay-Per-Click Advertising Work?
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Full Answer

As of 2015, the most popular pay-per-click advertising system is Google AdWords. In this system, advertisers choose keywords related to their businesses that they want to use to initiate their ads. When someone searches one of those keywords, Google shows the ads linked to those keywords. If the searcher clicks on an ad, Google charges the advertiser for the click.

Advertisers bid on keywords by deciding the maximum amount they want to pay, and that amount, multiplied by a quality score calculated by Google, is used to determine an advertiser's ad rank. The ad rank determines which ads display, and in what position, for each keyword. Google takes a number of factors into account to come up with the quality score, including how relevant an advertiser’s ad is to the keyword, the quality of the landing page the ad links to and the advertiser’s historical click-through rate and performance.

With pay-per-click advertising, businesses can quickly get their ads in front of people searching for what they offer, and they can precisely control and monitor every aspect of their advertising expense.

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