The Internet has opened new advertising opportunities for brick and mortar businesses that maintain websites as well as fully web-based businesses. In particular, search engines provide a unique method of online advertising that revolves around two separate models. The first is called pay per click or PPC. The second is known as pay per view or PPV. Both models are centered on enticing website visitors to perform an action. A PPC model tries to get a visitor to click on an advertisement, while a PPV model wants the visitor to view it.
Pay Per Click
PPC as a business model is largely dominated by Google through its AdWords program. AdWords centers on certain words or phrases that are called keywords. A keyword is a specific phrase relating to a topic or subject relevant to a business’s industry. For instance, a business selling pet supplies would target keywords like “dog leash” or “cat hair.” An advertiser could purchase a number of clicks per keyword that he wishes to target. Advertisers pay more per click for certain keywords if those keywords are in high demand.
The reverse side of this model is the websites who use AdSense to run advertisements on their sites. AdSense is the counterpart to AdWords that focuses on website owners. They can host AdSense ads on their sites and try to drive traffic based on specific keywords. A website owner can make more money by increasing the number of visitors who click on advertisements. PPC campaigns, like their PPV brethren, are targeted to specific keywords.
Pay Per View
PPV advertising is actually almost identical to PPC, but with one important difference. The advertiser pays each time an advertisement is viewed. In industry jargon, a view is called an impression. PPV is thus often known as pay per impression or PPI. This can be much more cost-effective since viewing an ad is much easier than clicking on one. The advertiser does not have to focus on getting a visitor to perform an action. Just seeing the ad will make the advertiser money. Google AdWords and AdSense utilize both the PPC and PPV models. Advertisers can use either one to market their businesses, products and services.
How PPC And PPV Changed Advertising
PPC and PPV advertising models solve a problem that has perennially bothered advertising companies: half their budgets are wasted. Moreover, they cannot know which half. A company that spends one million dollars on television advertisements has no way of knowing what ads worked and did not work.
Online advertising solves this problem by enabling companies to focus on keywords. Web analytics programs like Google Analytics can analyze traffic to discover which keywords bring in the most traffic for a website. This allows businesses to target their advertising budgets on the keywords that bring in the most revenue.
According to the Internet Advertising Board, a trade group, online advertisers took in more than $31 billion in revenue for 2011, the highest revenues yet on record. As Internet usage grows, so will online advertising. E-commerce, as it is called, may surpass traditional advertising in the coming years.