Pay per click (also referred to as PPC) is a system that advertisers and host websites use to gain exposure and to gain revenue. The simple formula works as follows: every time a user clicks on an advertisement, the advertiser pays the host site a negotiated amount of money. Both win. The advertiser gets the exposure needed for the product advertised and the host site gains some revenue.

In another scenario, advertisers can bid on certain key phrases on a search engine that will give their target audience access to their advertisements.

The model that is used for pay per click is known as the affiliate model. This is where users are presented with purchasing opportunities wherever they go. If the site hosting the advertisement doesn’t generate any sales, the advertiser doesn’t lose any money, but still has the opportunity of drawing his / her potential target audience from that site.

PPC ads are also known as sponsored ads or sponsored links and are usually placed next to or above the content of the site. These ads are triggered by one or more of the advertisers keywords on the list provided to the web developer. If a keyword is entered, the advertisement appears.

Of course there has to be network operators that regulate the system and guard against abuse by competitors and corrupt developers. The three current largest operators are Google, Yahoo! Search Marketing and Microsoft adCentre. Their model is the bid-based model yet their advanced technology and market share puts them in the position to offer the services required by hosts and advertisers alike.

As long as pay per click is implemented with a robust marketing plan in mind and there is no corruption, the advertiser and the host stand to reap many benefits from this symbiotic relationship.