Pay per click advertising is a marketing strategy used to increase traffic by paying the advertisement host every time the ad is clicked. Pay per click advertising (PPC) may also be called cost per click advertising (CPC). Such PPC advertising can help drive increased traffic to a web site, thus growing the advertising revenue or direct sales from that site.

Because the majority of Internet users find new web sites, products and services through search engine results, pay per click advertising on these engines is one of the prime ways a web site can increase traffic. The largest pay per click advertising providers for search engines include Google AdWords, Microsoft adCenter and Yahoo! Search Marketing.

For these three largest PPC services, each one asks advertisers to 'bid' a certain amount of money per click on keywords related to the web site's content. These bids determine how often the advertisement will be seen in search results and how highly these ads will be. Whoever is willing to bid highest to be found under a certain key word or phrase is the site that will end up highest in the search engine results and related pages.

The advertiser must decide how much they are willing to pay per click on their advertisements. Advertisers then pay for each click through they receive from the hosting source based on the amount they bid. A maximum amount to be spent per day is usually budgeted in addition to a maximum amount the advertiser is willing to pay per click. A PPC expert may be used to determine the best cost/benefit ratio and resulting PPC bid amount for an advertisement.

If an advertiser bids a maximum of 50 cents per click, for example, they may only pay 30 cents per click if no one else bids higher than that amount. However, if another advertiser sets their maximum PPC bid as 60 cents per click, then their results would show up higher or more frequently because they are willing to pay a higher PPC rate. To stay on top of the results or keep high visibility for an advertisement, constant PPC management is vital.

Pay per click advertising services may also take payment to place advertisements on other web sites or news sources. Google AdWords, for example, also gives advertisers the option to place pay per click advertisements in the Google Display Network. This allows advertisements to be displayed on web sites listed with the Google Display Network in addition to being featured in the search engine results.

Some pay per click services work on a flat fee model rather than a bid model. In a flat rate PPC model, the advertiser and advertising host agree on a set amount that will be paid for each click. Advertisers can often pay more to secure more highly visible slots on the advertising host's network or web site. A flat fee PPC rate is often used by an advertising host that displays ads on a small network of web sites or on just one particular web site. However, there are many large PPC services that display ads over a large network of sites that also use a flat fee model.

Pay per click management can be time-consuming and difficult for those unfamiliar with how to isolate the best keywords and phrases to market their web site and determine a profitable budget for doing so. PPC management experts can provide the skills and experience to scout out the most cost efficient and highest return keywords and phrases to use in PPC advertising for a specific web site or site network.