PPC stands for "pay per click". Pay per Click is an advertising model where businesses pay an agreed upon amount, each time their advertisement is "clicked", not each time their ad is displayed.
Advertisers typically setup ppc on a PPC network and define how much they are willing to spend for each click-through that they receive.
Advertisers select keywords, keyword phrases, keyword groups, or categories in which they want their advertisements to appear.
Advertisers willing to spend the most money for a relevant advertisement will generally be listed first. *Google's PPC ranking system assesses CPC (cost per click), ad relevance, click through rate, and daily budget, so the order on which the ads appear is based on a number of factors.
Benefits to PPC
When you setup a PPC campaign you can controlthe traffic. While a new website takes time to rank well in search engines, with PPC you can turn the traffic on and off. With PPC you can create almost instant traffic.
Unlike organic search listings you control the information (ie. description) and where the visitor is directed on your website.
Another benefit to PPC listings is the opportunities for international exposure. Organic search listings vary in different geographical regions. With PPC you control where you are seen.Click Fraud
Fraud has plagued PPC advertising medium since its inception, and while many PPC networks have made significant progress in combatting click fraud, it is still something to be cognizant of.
Tracking PPC
In order to determine how effective a PPC campaign is, it is important to implement tracking. Just because an advertisement has a high number of click throughs does not mean it is the best ad. It is easy to get users to click on "Free Software" but few of those clicks will convert to sales.
Excerpts from Digital River - Developer Resource.
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