PPC or Pay Per Click advertising is an online method of marketing that gives businesses the opportunity to advertise to potential customers who have already shown an interest in their products or services. This is fundamentally how PPC advertising works; after a client or potential customer types a phrase into a search engine associated with your business, they are then presented with a link to your website. Typically search engine results are presented in two ways; there are the organic results and sponsored results. The user can recognise the sponsored links as those at the top and the right of the page. It is the work of PPC specialists to ensure these sponsored links are presented for the correct terms and those keywords that will bring the most business.

When following the organic optimisation process it can take a great deal of time to achieve top rankings in search engines; with these results are achieved far faster. Unlike organic results however, the business placing sponsored links on the search engines must pay for each individual that follows their link, hence the term 'Pay per Click.' The cost of each click is calculated through a bidding process and understandably the cost relates to the popularity of the search term; for instance the term 'insurance' is likely to cost considerably more per click than a term like 'ice cream.'

It is easy to demonstrate how the PPC process operates, simply type a term such as MP3 player into a search engine and you will be presented with many sponsored links. These sponsored links are presented in order of how much each company is paying for the advert, although other factors such as relevancy and popularity are also included in calculating paid results. In the PPC industry Google Adwords and Adsense are frequently used although Yahoo has its own system named Overture.

PPC adverts are not purely presented in search results however; it is also possible to have them placed upon web pages. The web pages that the advert will be placed upon usually pertain to the keywords that the advert has been created for; for instance a website about technology may have adverts placed upon it adverts for HD televisions or MP3 players. These adverts are equally successful as those posted in the search engine results and charges for the adverts are calculated in the same way.

As with any advertising campaign the purpose of marketing is to achieve a substantial return on investment (ROI). To understand how much to spend it is vital to study how much competitors are paying for their adverts; by doing this it is possible to ascertain how much a successful advert will cost. After the advert has been created it is vitally important to monitor its success; this can be done with the use of software tools that will reveal how many paid click throughs have resulted in sales. By looking at the ratio of sales to visits it is possible to gain idea of whether the advert has been successful.

Hopefully this article has gone some of the way to explaining how PPC advertising operates and how it actively works towards bringing businesses more trade. While the article is brief it is intended purely as an introduction to the world of online advertising and how it can be used effectively to considerably increase profits.