Pay per click is an internet marketing strategy to attract visitors to a particular website. The advertising model can be understood by considering a simple scenario. Suppose I want traffic on my website and I sign up an affiliate marketing deal with another website in which the other website will show my advertisement and I will pay some money in return of every visitor who reaches to my website through my affiliate network. This is termed as Pay per click marketing. It is a successful marketing technique in which a low page ranked can generate traffic by partnering with websites who have comparatively higher traffic.

The advertisement can either be in the form of banner exchange or textual representation. Companies build up their affiliate network with other websites having similar content and business model. The cost for click and banner exchange varies according to the popularity and reach of any website. Higher ranked websites will charge more compared to lower ranked websites.

The business deal can either be between the two parties or through a bigger advertising network like the Google Adsense in which Google acts as the middle body and helps both advertiser and the publisher to find relevant source of advertisement for them in return of its own charge. There are two common modes for determining cost per click. One is Flat rate PPC and other is Bid based PPC.

Flat rate PPC is the advertising model in which the advertiser and the publisher or customer agrees upon a certain value that will be offered. Generally the deal is based on per 1000 clicks or per 1000 page views etc. The visibility of advertisement largely depends upon the money that the publisher is willing to pay. He/she can achieve greater visibility by offering a higher PPC.

In Bid based PPC model, the advertiser will have to place bid and compete with other advertisers in order to win it. Each advertiser bids with the maximum amount he is willing to pay for the advertisement channel along with other information related to advertising. To speed up and optimize this process several automated bid management systems can be deployed to facilitate both advertiser and the publisher.

This advertisement model can also include payment for impressions as well. Though the charges of impressions are fairly low compared to clicks but it still adds to a considerable amount in high traffic websites. The number of impressions is multiplied with Click through Rate (CTR) to convert it into number of clicks and then calculate the amount to be paid.

There can be various cases of fraud clicks and false impressions so it is always preferred to sign up with a good advertisement channel who implements proper measures to counter such frauds and provide you the most appropriate internet advertisement model.