The History of PPC
Pay per click (PPC) is an internet advertising tool that is used to drive traffic to a particular website. The advertiser contracts to pay the website owner or publisher a fixed amount when a visitor clicks on the ad. A content site such as a news aggregator charges a specific price for each click on banner or rail display ads. When the ad opportunity is offered by a search engine, such as Yahoo! or Google, the advertiser places a bid on keywords that are related to their customers' search queries. PPC is used to gauge how effective a particular ad is on a particular site, by charging the advertisers only when a visitor clicks through to the ad's source
Beginning of PPC
PPC was introduced to the web in 1996, when an ad was placed on Planet Oasis, an online directory that provided links to a variety of websites. While PPC had a slow start, more than 400 commercial brands were participating in PPC advertising by late 1997. In early 1998, the PPC search engine concept was presented during a TED conference by Jeffrey Brewer, then of Goto.com, a startup business that was later acquired by Yahoo! Before Google launched its search engine advertising initiative in 1999, search engine results pages (SERPs) were clobbered with unrelated search results. The lack of sophisticated algorithms left the door open for keyword, link, and index spamming, and pages of irrelevant search results left users fuming in the SERP wasteland. When Google introduced AdWords in October 2000, advertisers were able to buy text ads that garnered preferred placement on a SERP. The first use of AdWords was monetized via cost-per-thousand-impressions until 2002, when PPC was added to Google SERPs.
When dial-up modems incurred per-minute fees from the ISP - or the phone company when a toll-free access number was unavailable - users got on and offline as quickly as possible. However, when broadband access became common in homes and businesses, users were willing and able to spend additional time online. Broadband access opened up a new vista to the first generation of online consumers, which kicked the door wide open for online advertising strategies such as PPC. The early bid-based PPC model gave preference to the highest-bidding advertisers. This model did not account for the ad's effectiveness, just the revenue for the search engine. However, a seldom-clicked ad did not benefit the search engine, so Google introduced the Quality Score in the mid 2000s. Search engines prefer a 75-cent ad with a 15 percent click-through rate, over a $7 ad with a 2 percent click-through rate. The Quality Score measures the relevance and quality of the ad, giving the highest-revenue ads preferential placement in the sponsored portion of the page, over the organic search results. Other search engines, such as Microsoft and Yahoo!, implemented a similar program to maximize their ad revenues and relevance.
According to eMarketer, Google made $22 billion in worldwide ad revenue in 2009; the average cost per click was $0.60 over 37 billion clicks. In 2012, Google generated $42.5 billion in all ad revenues.