Your maximum bid amount is the maximum amount of money you are willing to pay when a visitor clicks on your ad and gets referred (redirected) to your website. You do not have to pay for the display of the ad as you would in a CPM Model*.
*There are exceptions where one pays per impression rather than per click. For example, the Google AdWords "Content Network" uses CPM. (Google's publisher sites offer on-site signup via the "Advertise on this site" link.) Google is currently experimenting with CPA based models as an alternative to CPM for the onsite signup. Despite CPM and CPA, Pay-Per-Click is the most common model in SEM today.
The only major player that remained undeterred was the PPC pioneer GoTo.com, later renamed Overture.com and purchased in 2003 by Yahoo! Today it is known as the Yahoo! Search Marketing service.
Search engine GoTo debuted its new pay-for-placement service on February 21, 1998, but was not the first one who experimented with the Pay-for-placement model. Open Text experimented with it in mid-1996, and numerous small search directories offered the ability to pay for a better ranking prior GoTo's re-launch. GoTo.com launched in 1997 already and incorporated the former University of Colorado-based World Wide Web Worm, showing search results algorithm-ranked, until they introduced the pay-per-placement model on that day.*
PPC Advertising made a big comeback when Google launched its AdSense Service on June 18, 2003, the day that can be called the official birth date of contextual advertising. Google launched their PPC service Google AdWords in 2000 and saw only mild success with it until 2003.
Ask Jeeves, now simply Ask.com, followed with their PPC service in 2005 called Ask Sponsored Listings and MSN.com, followed in 2006 with Microsoft AdCenter. Other large PPC service providers and Search Engines are Miva/FindWhat.com and 7Search.com.
Yahoo! launched its contextual advertising service, YPN or the Yahoo! Publisher Network, in 2005 (and it is even better today) and Microsoft is expected to launch its contextual advertising service based on their new AdCenter PPC Service in late 2006.
Click fraud is still a problem today and cannot be 100% prevented, due to the nature of how PPC works. However, methods to prevent the problem's escalation have evolved since the dot com crash in 2000. It is likely that the problem can and will be solved to reduce the impact of click fraud on the overall cost of PPC marketing and ROI to an acceptable number. The environment in which PPC is used has changed. This increases the chance that the problems that caused the "death" of PPC years ago will not cause its downfall today and will make it an advertising model that remains here to stay.
PPC advertising services offered today are offered almost exclusively by large and specialized service providers. PPC plays almost no role in direct referral marketing between individual websites. Affiliate/Performance Marketing is king and will remain so for the foreseeable future. The features and benefits of CPA and CPS, the domains of classic affiliate marketing, will almost certainly influence today's PPC services. Hybrids of CPC/CPM and CPA/CPS will eventually blur the borders between the currently distinct advertising models.
To learn more about SEO, visit my Search Engine Optimization Resources Page.
Today, basic solutions that track your website traffic and conversion and help you with the analysis and evaluation of your campaigns are no longer expensive. Some options are even free except for the price of sharing your data with the solution provider.
If you don't mind that Google has access to your tracking data, sign up for Google Analytics which is free. Another option would be ClickTracks which offers different tracking and analytics packages depending on your needs and the size of your online business.
You can find more information and resources on this topic at my Web Analytics Resources Page and List of Web Analytics Books.
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©2006 Carsten Cumbrowski
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