Pay Per Click (PPC) is an Internet advertising model used on search engines, advertising networks, and content sites, such as blogs, in which advertisers pay their host only when their ad is clicked. With search engines, advertisers typically bid on keyword phrases relevant to their target market. Content sites commonly charge a fixed price per click rather than use a bidding system.

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 or above organic results on search engine results pages, or anywhere a web developer chooses on a content site.

Although many PPC providers exist, Google AdWords, Yahoo! Search Marketing, and Microsoft adCenter are the three largest network operators. Cost per click (CPC), vary depending on search engine and the level of competition for a particular key word or key phrase.

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

Pay per click campaigns can be categorized into two major categories: sponsored match (or keyword) and content match. Sponsored match campaigns involve the display of advertisements on search engine results pages, whereas content match campaigns involve the display of advertisements on publisher websites, newsletters, and e-mails.

There are other types of pay per click programs that target product or service searches and product comparison sites. Search engine companies may participate in more than one category. PPC programs do not generate any revenue solely from Web traffic for websites that display the advertisements: Revenue is generated only when a user clicks on the advertisement itself.

Keyword-based PPC

Keyword-based pay per click advertisers bid on search terms—keywords consisting of words or phrases, and possibly product model numbers. Sponsored search engine placement is an online marketing system whereby advertisers may bid for advertisements that appear alongside, above or below search engine results for certain keywords. Typically the highest bidder for each keyword will be listed at the top of the search engine listings page. However in recent years the quality and relevance of the landing page (the page to which the sponsored result links to) have been added to the algorithm to determine placement^. Keywords are the very heart of PPC advertising, and are guarded as highly-valued trade secrets by the advertisers. Many advertising firms offer software or services to help advertisers develop keyword strategies. Content Match, a service offered by Yahoo!, distributes the keyword ad to the search engine's partner sites and/or publishers that have distribution agreements with the search engine company.

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