The advertisements that appear on search engines are often placed above or next to the organic search results and are called sponsored links. The advertisements are displayed when a user's choice of keywords matches those submitted by an advertiser. The keywords are bid upon by advertisers, depending upon their estimate of the keywords that users are likely to key in, while searching for information on related topics.

On popular search engines, the search terms that are among the most popular ones tend to attract high prices from advertisers.

On a blog or a content website, the location for the advertisements is chosen by the blogger or the webmaster. Such advertisements are also displayed on content network sites. Advertisements relevant to the content of the web pages are used there.

Even as leading search engines have introduced safeguards in the form of systems that are meant to automatically detect wrongdoing, the PPC model is still susceptible to fraudulent clicks.

PPC can, in fact, prove to be a very simple and cost-effective advertising model.

The advertisements placed by those who bid a higher amount on a set of keywords are likely to be displayed above the advertisements placed by those who bid an amount that is lower. So, the costs have to be managed well, so as to get the maximum benefit from the money spent on purchasing the advertising space on various search engines. It is important to not bid more than absolutely necessary, on a set of keywords.

Also, the measurement of returns on investment can be difficult, at times. This is because the tools, even those provided by some of the major PPC providers, do not always provide accurate data.

The traffic generated by PPC advertising is not always of the most relevant type either. Since the results from PPC services are shared with many search engines, all of these do not reach the targeted audience. So, some of the traffic generated actually turns out to be junk. The resultant hits can inflate the statistics, but not lead to conversions.

Additionally, there are no economies of scale available, as the cost per click is unchanged, regardless of the number of clicks. The advertisements might, actually, become unsustainable, if costs increase beyond a certain point. Still, the PPC model is advantageous as it can help a website get traffic almost immediately, especially if the keywords that the advertiser bids upon are close to those used by searchers, while they look for related services or products.

It is also easier to effect modifications in PPC advertisements, based on the conditions in the market. Though it can take several weeks or even months, before results of changes made through search engine optimization can materialize, adjustments made in PPC advertisements can effect changes in traffic within days or even hours.

Besides, it is often possible to locate niches, for keywords, where the leading bids tend not to be too high, at any point of time. In such a case, it is far less expensive to build up traffic, as against any other advertising model.

PPC model's role in advertising:

1. The PPC model can prove beneficial for a campaign for promotion of a special issue, or a new service or a product as it can help catch attention almost instantaneously. Hence, using PPC can be a good idea, if advertising has to be done for a specified period of time.

2. If the visitors land on a page, through PPC advertisements, where a service or product can be purchased right away, such advertisements can be a very appropriate marketing tool.

3. As far as possible, PPC advertising should be aimed at securing conversions, rather than merely increasing the number of clicks and, so, should be highly focused.

To improve the chances of success of a PPC campaign, the following should be taken care of:

1. The conversions should be tracked

2. The budget should be prepared sensibly

3. Keywords that are specific and are available for a lower bidding price should be found

4. The description of the service should be written in accordance with the PPC provider's guidelines

5. It is more economical to pay for securing the third spot among the sponsored links on a search engine, than the first one, since nearly identical results can be achieved, in this manner

6. The advertisements should be adjusted as often as required, while looking out against changes that might not represent a long-term trend