Web or Internet Advertising is a powerful marketing tool that can be used to drive traffic to your website. Internet marketing include several different types of advertising, such as Search Engine Marketing (SEM), Display Advertising, Social Media advertising etc. etc. Although, internet marketing can be used for many different purposes, one of the prime objective is to entice clicks and redirect traffic to a website or webpage.
Usually web advertising is not free…. You will need to pay a provider a fee or price just as with every other form of marketing. There are several different models that are used in Web advertising to calculate the price or cost. These are several different cost models such as Pay per click (PPC), Pay per Mille (PPM), Pay per View (PPV) to name a few.
So, What is PPC and CPC and how do they differ…
Pay-per-Click or PPC is the term in Internet advertising where the cost model is based on or is dependent on the Ad Conversion or Click-thru Rate (CTR). You pay only when an Ad is clicked by the user.
Your ads are shown or displayed to various different users based on your settings for targeting and/or segmentation, for example only to females between the ages of 25 and 35. When a user clicks on an ad to visit your page, an event is recorded. You pay the provider based on the number of click events that has been recorded.
How much you pay for each click can also vary depending on how the provider calculates the price, which is usually known upfront. Some providers charge a flat rate, where every click costs the same. Sometimes, as in the case with Google Adwords, ads are displayed using a bidding process which means you can specify a maximum bid amount but the actual cost of each click can vary each time.
CPC, which is short for Cost-per-Click, is the actual average cost of each click over a period of time. The difference between PPC and CPC is that while PPC refers to a particular cost model that is used for internet advertising, CPC itself refers to the actual cost of the click while using PPC model. Often times you will see the two terms used interchangeably.
Google Adwords is one of the most popular platform for PPC marketing. It supports PPM as well. But PPC is the only model available with Google Search Engine marketing, the PPM model is available with Display network, via Google Adsense.
Because of its wide usage in Google Adwords and its popularity, the term PPC is sometimes used interchangeably with Google Adwords marketing. Technically these two are different things, with the Google Adwords just being one particular implementation of the PPC model.
Most factors affecting PPC also affect internet marketing in general, whether it be PPC, PPM, PPV or any other model. We will take a look at some of advantages and disadvantages of PPC when compared to other marketing pay models.
Pay Only for Traffic: In this model, the conversion or effectiveness of the ad is calculated using the number of clicks you receive or the user interaction with the ad. You pay only when there is a click on the ad. This means you have some kind of guarantee that you will not (over)pay for ads that do not convert to traffic.
Immediate Ranking and Exposure: The response and exposure you get from advertising is much faster when compared to SEO. PPC is the only available model for Google SERP, which means if you are using Google Adwords to advertise on Google search engine result pages, then you are using PPC. You rank better and faster with this than you might with just SEO.
Meaningful Statistics: There is a tighter co-relation to keywords and other measurable statistics. This means you can easily find factors that affect your campaign such as keywords, demographics, location and other information.
Focused Audience: Usually the PPC model is also based on keywords or search queries. This means that it is very likely that you will see more focused audience than the PPM model. Although, it is not a necessary that PPC model be based on a search keyword and is dependent on the implementation.
Independent of Revenue on Site: You pay for the traffic not exactly for the revenue that it generates. You pay even if the click does not convert to a sale on the website.
Inconsistent Traffic: You have to set a max budget, which means you can run out of budget. There are no set value or cost for a click (sure, there is a max bid per impression), but you usually pay depending on the keyword and the competition. This means you have no way of predicting the total impressions or clicks you will receive each day.
Click Fraud: It is the type of fraud where a click is imitated either manually or by automated programs with the sole purpose of generating more revenue for the host site or middle man.
Despite some of the disadvantages, the pros outweigh the cons to a large extent that it is the most widely used and popular model that is used in web advertising.