Adwords

AdWords is Google's flagship advertising product and main source of revenue ($21 billion in 2008). AdWords offers pay-per-click (PPC) advertising, and site-targeted advertising for both text and banner ads. The AdWords program includes local, national, and international distribution. Google's text advertisements are short, consisting of one title line and two content text lines. Image ads can be one of several different Interactive Advertising Bureau (IAB) standard sizes.
Sales and Support for Google's AdWords division is based in Ann Arbor, Michigan, the company's third-largest facility behind its Mountain View, California, headquarters and New York City office.Engineering for AdWords is based in Mountain View, California.
Pay-Per-Click advertisements (PPC)
Advertisers specify the words that should trigger their ads and the maximum amount they are willing to pay per click. When a user searches Google's search engine on www.google.com or the relevant local/national google server (e.g. www.google.co.uk for The United Kingdom), ads (also known as creatives by Google) for relevant words are shown as "sponsored links" on the right side of the screen, and sometimes above the main search results.
The ordering of the paid-for listings depends on other advertisers' bids (PPC) and the "quality score" of all ads shown for a given search. The quality score is calculated by historical click-through rates, relevance of an advertiser's ad text and keywords, an advertiser's account history, and other relevance factors as determined by Google. The quality score is also used by Google to set the minimum bids for an advertiser's keywords. The minimum bid takes into consideration the quality of the landing page as well, which includes the relevancy and originality of content, navigability, and transparency into the nature of the business. Though Google has released a list of full guidelines for sites, the precise formula and meaning of relevance and its definition is in part secret to Google and the parameters used can change dynamically.
The auction mechanism that determines the order of the ads has been described as a Generalized second-price auction. This is claimed to have the property that the participants do not necessarily fare best when they truthfully reveal any private information asked for by the auction mechanism (in this case, the value of the keyword to them, in the form of a "truthful" bid).

Placement targeted advertisements (formerly Site-Targeted Advertisements)
In 2003 Google introduced site-targeted advertising. Using the AdWords control panel, advertisers can enter keywords, domain names, topics, and demographic targeting preferences, and Google places the ads on what they see as relevant sites within their content network. If domain names are targeted, Google also provides a list of related sites for placement. Advertisers may bid on a cost per impression (CPI) or cost per click (CPC) basis for site targeting .
With placement targeting, it is possible for an ad to take up the entire ad block rather than have the ad block split into 1 to 4 ads, resulting in higher visibility for the advertiser.
The minimum cost-per-thousand impressions bid for placement targeted campaigns is 25 cents. There is no minimum CPC bid, however.

AdWords distribution
All AdWords ads are eligible to be shown on www.google.com. Advertisers also have the option of enabling their ads to show on Google's partner networks. The "search network" includes AOL search, Ask.com, and Netscape. Like www.google.com, these search engines show AdWords ads in response to user searches.
The "content network" shows AdWords ads on sites that are not search engines. These content network sites are those that use AdSense, the other side of the Google advertising model. AdSense is used by website owners who wish to make money by displaying ads on their websites. Click through rates on the content network are typically much lower than those on the search network and are therefore ignored when calculating an advertiser's quality score. It has been reported that using both AdSense and AdWords may cause a website to pay Google a commission when the website advertises itself.
Google automatically determines the subject of pages and displays relevant ads based on the advertisers' keyword lists. AdSense publishers may select channels to help direct Google's ad placements on their pages, to better track performance of their ad units. There are many different types of ads you can run across Google's network, including text ads, image ads (banner ads), local business ads, mobile text ads, and in-page video ads.
Google AdWords' main competitors are Yahoo! Search Marketing and Microsoft adCenter.

AdWords account management
To help clients with the complexity of building and managing AdWords accounts search engine marketing agencies and consultants offer account management as a business service. This has allowed organizations without advertising expertise to reach a global, online audience. Google has started the Google Advertising Professionals program to certify agencies and consultants who have met specific qualifications and passed an exam. Google also provides account management software, called AdWords Editor.
Another useful feature is the My Client Centre available to Google Professionals (even if not yet passed the exam or budget parameters) whereby a Google professional has access and a dashboard summary of several accounts and can move between those accounts without logging in to each account.
The Google Adwords Keyword Tool provides a list of related keywords for a specific website or keyword.

Click-to-Call
Google Click-to-Call was a service provided by Google which allows users to call advertisers from Google search results pages. Users enter their phone number, Google calls them back and connects to the advertiser. Calling charges are paid by Google. It was discontinued in 2007. For some time similar click-to-call functionality was available for results in Google Maps.

History
The original idea was invented by Bill Gross from Idealab who, in his turn, borrowed it from yellow pages. Google wanted to buy out the idea but the deal would not get closed.[citation needed] Google did not want to give up and launched AdWords in 2000.[10]. AdWords followed Bill Gross' model to a significant extent. In the course of legal action Google and Idealab settled the dispute.
At first AdWords advertisers would pay a monthly amount, and Google would then set up and manage their campaign. To accommodate small businesses and those who wanted to manage their own campaigns, Google soon introduced the AdWords self-service portal. Starting in 2005 Google provided a campaign management service called Jumpstart [11] to assist advertisers in setting up their campaigns. However, this service is no longer available, so companies needing assistance must hire a third-party service provider.
In 2005, Google launched the Google Advertising Professional (GAP) Program to certify individuals and companies who have completed AdWords training and passed an exam. Due to the complexity of AdWords and the amount of money at stake, some advertisers hire a consultant to manage their campaigns.

Legal context
AdWords has generated lawsuits in the area of trademark law and click fraud. In 2006, Google settled a click fraud lawsuit for US$90 million.
Overture Services, Inc. sued Google for patent infringement in April 2002 in relation to the AdWords service. Following Yahoo!'s acquisition of Overture, the suit was settled in 2004 with Google agreeing to issue 2.7 million shares of common stock to Yahoo! in exchange for a perpetual license under the patent.

Technology
The AdWords system was initially implemented on top of the MySQL database engine. After the system had been launched, management decided to use a commercial database (Oracle) instead. As is typical of applications simultaneously written and tuned for one database, and ported to another, the system became much slower, so eventually it was returned to MySQL. The interface has also been revamped to offer better work flow with additional new features, such as, Spreadsheet Editing, Search Query Reports, and better Conversion Metrics

Policy and restrictions
As of April 2008 Google AdWords no longer allows for the display URL to deviate from that of the destination URL. Prior to its introduction, Google paid advertisements could feature different landing page URLs to that of what was being displayed on the search network. Google expounds that the policy change stems from both user and advertiser feedback. The concern prompting the restriction change is believed to be the premise on which users clicked advertisements. Users were in some cases, being misled and further targeted by AdWords advertisers.
Google has other restrictions, for example the advertising of a book by Aaron Greenspan called Authoritas: One Student's Harvard Admissions and the Founding of the Facebook Era, was restricted from advertising on AdWords because it contained the word Facebook in it. Google's rationale was that it was prohibited from advertising a book which used a trademarked name in its title.

Allowed keywords
Google has also come under fire for allowing AdWords advertisers to bid on trademarked keywords. In 2004, Google started allowing advertisers to bid on a wide variety of search terms in the US and Canada, including the trademarks of their competitors and in May 2008 expanded this policy to the UK and Ireland. Advertisers are restricted from using other companies' trademarks in their advertisement text if the trademark has been registered with Advertising Legal Support team. Google does, however, require certification to run regulated keywords, such as those related to pharmaceuticals keywords, and some keywords, such as those related to gambling and hacking, are not allowed at all. These restrictions may vary by location. From June 2007, Google banned AdWords adverts for student essay writing services. While the move was welcomed by universities, there is no restriction on such sites appearing in the regular Google Search results

Performance Based Advertisement

With performance-based advertising, the advertiser pays only for measurable results.
With other forms of advertising they pay regardless of results. Performance-based advertising is becoming more common with the spread of electronic media, notably the Internet, where it is possible to directly measure user actions that result from the advertisement. In fact, over half of all internet advertising is performance-based today.

Pricing Models
There are four common pricing models used in the online performance advertising market.
CPM (Cost-per-Thousand) Pricing Models charge advertisers for impressions - i.e. the number of times people view an advertisement. Display advertising is commonly sold on a Cost-per-Lead pricing model. The problem with CPM advertising is that advertisers are charged even if the target audience does not click on (or even view)the advertisement.
CPC (Cost-per-Click) advertising overcomes this problem by charging advertisers only when the consumer clicks on the advertisement. However, due to increased competition, search keywords have become very expensive. A 2007 Doubleclick Performics Search trends Report shows that there were nearly six times as many keywords with a cost per click (CPC) of more than $1 in January of 2007 than the prior year. The cost per keyword increased by 33% and the cost per click rose by as much as 55%.
In recent times, there has been a rapid increase in online lead generation - banner and direct response advertising that works off a CPL pricing model. In a Cost-per-Lead pricing model, advertisers pay only for qualified leads - irrespective of the clicks or impressions that went into generating the lead. CPL advertising is also commonly referred to as online lead generation.
Cost per Lead (CPL) pricing models are the most advertiser friendly. A recent IBM research study found that two-thirds of senior marketers expect 20 percent of ad revenue to move away from impression-based sales, in favor of action-based models within three years. CPL models allow advertisers to pay only for qualified leads as opposed to clicks or impressions and are at the pinnacle of the online advertising ROI hierarchy.
In CPA advertising, advertisers pay for a specific action such as a credit card transaction (also called CPO, Cost-Per-Order).
Advertisers need to be careful when choosing between CPL and CPA pricing models.
In CPL campaigns, advertisers pay for an interested lead - i.e. the contact information of a person interested in the advertiser's product or service. CPL campaigns are suitable for brand marketers and direct response marketers looking to engage consumers at multiple touchpoints - by building a newsletter list, community site, reward program or member acquisition program.
In CPA campaigns, the advertiser typically pays for a completed sale involving a credit card transaction. CPA is all about 'now' -- it focuses on driving consumers to buy at that exact moment. If a visitor to the website doesn't buy anything, there's no easy way to remarket to them.
There are other important differentiators:
1. CPL campaigns are advertiser-centric. The advertiser remains in control of their brand, selecting trusted and contextually relevant publishers to run their offers.On the other hand, CPA and affiliate marketing campaigns are publisher-centric. Advertisers cede control over where their brand will appear, as publishers browse offers and pick which to run on their websites. Advertisers generally do not know where their offer is running.
2. CPL campaigns are usually high volume and light-weight.In CPL campaigns, consumers submit only basic contact information. The transaction can be as simple as an email address. On the other hand, CPA campaigns are usually low volume and complex. Typically, consumer has to submit credit card and other detailed information.
CPL advertising is more appropriate for advertisers looking to deploy acquisition campaigns by re-marketing to end consumers through e-newsletters, community sites, reward programs, loyalty programs and other engagement vehicles.

Economic Benefits
Many advertisers have limited budgets and may not understand the most effective method of advertising. With performance-based advertising plans, they avoid the risk of paying large amounts for advertisements that are ineffective. They pay only for results.
The advertising agency, distributor or publisher assumes the risk, and is therefore motivated to ensure that the advertisement is well-targeted, making best use of the available inventory of advertising space. Electronic media publishers may choose advertisements based on location, time of day, day of week, demographics and performance history, ensuring that they maximize revenue earned from each advertising slot.
The close attention to targeting is intended to minimize the number of irrelevant advertisements presented to consumers. They see advertisements for products and services that are likely interest them. Although consumers often state that advertisements are irritating, in many situations they find the advertisement useful if they are relevant.

Metrics
Various types of measurable action may be used in charging for performance-based advertising:
Many Internet sites charge for advertising on a "CPM" (Cost per Thousand) or Cost per impression basis. That is, the advertiser pays only when a consumer sees their advertisement. Some would argue that this is not performance-based advertising since there is no measurement of the user response.
Internet sites often also offer advertising on a "PPC" (pay per click) basis. Google's AdWords product and equivalent products from Yahoo!, Microsoft and others support PPC advertising plans.
A small but growing number of sites are starting to offer plans on a "Pay per call" basis. The user can click a button to place a VoIP call, or to request a call from the advertiser. If the user requests a call, presumably they are highly likely to make a purchase.
Finally, there is considerable research into methods of linking the user's actions to the eventual purchase: the ideal form of performance measurement.
Some Internet sites are markets, bringing together buyers and sellers. eBay is a prominent example of a market operating on an auction basis. Other market sites let the vendors set their price. In either model, the market mediates sales and takes a commission - a defined percentage of the sale value. The market is motivated to give a more prominent position to vendors who achieve high sales value. Markets may be seen as a form of performance-based advertising.
The use of mobile coupons also enables a whole new world of metrics within identifying campaign effect. There are several providers of mobile coupon technology that makes it possible to provide unique coupons or barcodes to each individual person and at the same time identify the person downloading it. This makes it possible to follow these individuals during the whole process from downloading until when and where the coupons are redeemed.

Media
Although the Internet introduced the concept of performance-based advertising, it is now spreading into other media.
The mobile telephone is increasingly used as a web browsing device, and can support both pay-per-click and pay-per-call plans. Coupons delivered to the mobile handset can be used to link advertising direct to sales. As consumers start to use their mobile handset as an electronic payment device, it may become practical to establish direct linkage between advertising and purchases. The linkage may be indirect. A consumer may use their mobile phone to scan a barcode on an outdoor advertisement. This loads the advertiser's mobile site onto the phone. When the consumer shortly afterwards goes to the advertiser's store and uses their phone to make a purchase, the linkage can be inferred.
Directory assistance providers are starting to introduce advertising, particularly with "Free DA" services such as the Jingle Networks 1-800-FREE-411, the AT&T 1-800-YELLOWPAGES and the Google 1-800-GOOG-411. The advertiser pays when a caller listens to their advertisement, the equivalent of Internet CPM advertising, when they ask for additional information, or when they place a call.
IPTV promises to eventually combine features of cable television and the Internet. Viewers may see advertisements in a sidebar that are relevant to the show they are watching. They may click on an advertisement to obtain more details, and this action can be measured and used to charge the advertiser.
It is even possible to directly measure the performance of print advertising. The publisher prints a special telephone number in the advertisement, used nowhere else. When a consumer places a call to that number, the call event is recorded and the call is routed to the regular number. The call could only have been generated because of the print advertisement.

Pricing
A publisher may charge defined prices for performance-based advertising, so much per click or call, but it is common for prices to be set through some form of "bidding" or auction arrangement. The advertiser states how much they are willing to pay for a user action, and the publisher provides feedback on how much other advertisers have offered. The actual amount paid may be lower than the amount bid, for example 1 cent more than the next highest bidder.
A "bidding" plan does not guarantee that the highest bidder will always be presented in the most prominent advertising slot, or will gain the most user actions. The publisher will want to earn the maximum revenue from each advertising slot, and may decide (based on actual results) that a lower bidder is likely to bring more revenue than a higher bidder - they will pay less but be selected more often.
In a competitive market, with many advertisers and many publications, defined prices and bid-based prices are likely to converge on the generally accepted value of an advertising action. This presumably reflects the expected sale value and the profit that will result from the sale. An item like a hotel room or airplane seat that loses all value if not sold may be priced at a higher ratio of sale value than an item like a bag of sand or box of nails that will retain its value over time.
A number of companies provide products or services to help optimize the bidding process, including deciding which keywords the advertiser should bid on and which sites will give best performance.

Issues
There is the potential for fraud in performance-based advertising.
The publication may report excessive performance results, although a reputable publication would be unlikely to take the risk of being exposed by audit.
A competitor may arrange for automatically-generated clicks on an advertisement
Since the user's actions are being measured, there may be some concern of loss of privacy

Cost Per Engagement (CPE)

Cost Per Engagement (CPE) is the online advertising pricing structure that was used to launch the latest Fatboy Slim album.
Differing from cost per impression or click through rate models, a Cost Per Engagement model means advertising impressions are free and advertisers pay only when a user engages with their ad unit. Engagement is defined as a user interacting with an ad in any number of ways, including playing a game, taking a poll, rolling over an ad unit for a specified amount of time or taking a product tour.
Cost Per Engagement brings a measure of performance to online advertising. Ads are served for free, and advertisers pay only when a user engages with their brand content. The approach has given advertisers a choice between quantity and quality.
This technique may be applied to ad formats including video and rich media, for example, in web banners as invitations to view longer-form branded content such as videos, games or other interactive experiences such as widgets. An ad unit offering Cost Per Engagement appears like standard display ads with a few seconds of preview video. Users mouse over the ads to display a Flash window that shows the full clip without forcing users to leave the page.

Other Advertising Pricing Models
Other advertising pricing structures include CPC- Cost Per Click, CPL - Cost Per Lead (lead usually meaning a free registration), CPS - Cost Per Sale and CPM/CPI – Cost Per Impression, which is used to measure the effectiveness of advertising inventory sold (by the publisher) via a CPC, CPA, or CPT basis.
These structures are collectively referred to as CPA - Cost per Action, which is an online advertising pricing model, where the advertiser pays for each specified action (a purchase, a form submission, and so on) linked to the advertisement. Cost Per Engagement could be considered a sub-set of CPA in that the advertiser is paying specifically when a consumer engages with an ad. Today it is very common for advertisers to buy online inventory based on impression, spending a set amount per thousand delivered views-- what’s known as CPM.

History
The decision to price ad units only when users take action is meant to bring the accountability of online direct response placements, like search, to brand units as brands only pay when an action is taken. Despite more brand dollars moving from traditional media, pricing for Internet ads has remained heavily weighted toward performance metrics like Cost Per Click (CPC). According to the Interactive Advertising Bureau (IAB), 50 percent of deals in the first half of 2007 were performance priced, part of a steady increase compared to CPM pricing.
By placing ads where users are most likely to respond, the advertiser passes the risk onto the ad network as the advertiser is charged only for interactions

Pay Per Call (PPcall)

Pay-per-call (PPCall) is a concept similar to pay-per-click (PPC) advertising which is the dominant form of online advertising. In pay-per-call, however, the advertiser receives a phone call, a majority of current pay per call provider use web forms to generate phone calls. On web based only platforms, merchants define their relevant keyterms, choose their desired categories and decide upon the geographic area where they'd like their ad to appear (local, regional or national) From there, they create their ad, containing their company name, address, a short description and a trackable toll-free telephone number which redirects to the advertiser's actual phone number.
Given the high rate of reported click fraud, Pay-per-call services is believed to be a better solution to connect potential customers to advertisers.

Pay per Post (PPP)

PayPerPost (PPP) is a website which helps content creators such as bloggers find advertisers willing to sponsor specific content. The advertisers create opportunities ("opps") that describe the content they are looking for (e.g. feedback, reviews, buzz, creative, video). The bloggers (sometimes referred to as "Posties") then choose opportunities in their area of interest.
Once the blogger has written a blog post or posted a video that matches the requirements, PPP then reviews the post against its requirements (e.g. topic, tone, length) and PPP terms of service (e.g. disclosure required, no adult content), and handles payment.
In April 2007, PPP introduced a segmentation system whereby advertisers can limit which bloggers qualify for their opportunity. The system uses criteria such as Google Page Rank, Alexa rank, blogger quality rank, RealRank and blog categories. They can also exclude blogs on certain domains.
PayPerPost sparked controversy in its first year, with critics saying that sponsored blogging was unethical. It has received sustained criticism from technology blogger Michael Arrington and sustained support from technology blogger Andy Beard. Some supporters said that sponsored blogging helps "blue-collar bloggers", and PayPerPost members asserts that there is room for all views in the blogosphere.
PayPerPost is a business unit of IZEA, founded by Ted Murphy, who had also founded the interactive agency MindComet and the "BlogStar Network", designed to connect advertisers with bloggers in a manual, non-marketplace fashion. "BlogStar Network" was later absorbed by PayPerPost.

Pay for Placement (P4P)

Pay for placement, or P4P, is an Internet advertising model in which advertisements appear along with relevant search results from a Web search engine. Under this model, advertisers bid for the right to present an advertisement with specific search terms (i.e., keywords) in an open auction. When one of these keywords is entered into the search engine, the results of the auction on that keyword are presented, with higher ranking bids appearing more prominently on the page.
When P4P was first introduced, controversy arose because seventy percent of Internet users were unaware that search results could be skewed as a result of such agreements, which in some cases led to legal action.[3] Many users felt that the search results would be irrelevant; however, the auction model has proven to be effective at producing relevant results for searches where the user wants to purchase something.[citation needed] P4P is now seen as the most efficient and effective way to monetize search engines

Cost per impression

Cost per impression, often abbreviated to CPI or CPM for Cost per thousand impressions, is a phrase often used in online advertising and marketing related to web traffic. It is used for measuring the worth and cost of a specific e-marketing campaign. This technique is applied with web banners, text links, e-mail spam, and opt-in e-mail advertising, although opt-in e-mail advertising is more commonly charged on a cost per action (CPA) basis although Sometimes (CPM) is used.
An online advertisement impression is a single appearance of an advertisement on a web page. Each time an advertisement loads onto a user's screen, the ad server may count that loading as one impression. However, the ad server may be programmed to exclude from the count certain nonqualifying activity such as a reload, internal user actions, and other events that the advertiser and ad serving company agreed to not count. For online advertising, the numbers of views can be a lot more precise. When a user requests a web page, the originating server creates a log entry. Also, a third party tracker can be placed in the web page to verify how many accesses that page had. There are other advertising pricing structures, which are generally referred to as Cost Per Action (CPA) :
CPC - Cost per click Through
CPL - Cost per lead (lead usually meaning a free registration)
CPS - Cost per sale
CPI and/or Flat rate advertising deals are sometimes preferred by the publisher/webmaster because they will receive a more consistent fee proportional to the amount of traffic.
Today, it is very common for large publishers to charge for most of their advertising inventory on a CPM or CPT basis. A related term, effective cost per mille (CPM), is used to measure the effectiveness of advertising inventory sold (by the publisher) via a CPC, CPA, or CPT basis.
This type of advertising arrangement closely resembles television and print advertising methods for speculating the cost of an advertisement. Often, industry agreed approximates are used. With television, the Nielsen Ratings are used; print is based on the circulation a publication has.

Cost Per Thousand
CPM is frequently used in advertising to represent cost per thousand (where M is the roman numeral of 1000). When used in advertising it relates to the cost per thousand page impressions.
For sites earning revenue for advertising impressions, the related abbreviation RPM (revenue per thousand impressions) may be used.
It is important to remember that when someone says something like, "our CPM is $5," this means that the cost per impression is $0.005.

Cost per action (CPA)

Cost Per Action or CPA (sometimes known as Pay Per Action or PPA) is an online advertising pricing model, where the advertiser pays for each specified action (a purchase, a form submission, and so on) linked to the advertisement.
Direct response advertisers consider CPA the optimal way to buy online advertising, as an advertiser only pays for the ad when the desired action has occurred. An action can be a product being purchased, a form being filled, etc. The desired action to be performed is determined by the advertiser.
The CPA can be determined by different factors, depending where the online advertising inventory is being purchased.

CPA as "Cost Per Acquisition"
CPA is sometimes referred to as "Cost Per Acquisition", which has to do with the fact that most CPA offers by advertisers are about acquiring something (typically new customers by making sales). Using the term "Cost Per Acquisition" instead of "Cost Per Action" is not incorrect. It is actually more specific. "Cost Per Acquisition" is included in "Cost Per Action", but not all "Cost Per Action" offers can be referred to as "Cost Per Acquisition".

The Difference between CPA and CPL Advertising
In CPL campaigns, advertisers pay for an interested lead (hence, Cost Per Lead) — i.e. the contact information of a person interested in the advertiser's product or service. CPL campaigns are suitable for brand marketers and direct response marketers looking to engage consumers at multiple touchpoints — by building a newsletter list, community site, reward program or member acquisition program.
In CPA campaigns, the advertiser typically pays for a completed sale involving a credit card transaction. CPA is all about 'now' — it focuses on driving consumers to buy at that exact moment. If a visitor to the website doesn't buy anything, there's no easy way to remarket to them.
There are other important differentiators:
CPL campaigns are advertiser-centric. The advertiser remains in control of their brand, selecting trusted and contextually relevant publishers to run their offers. On the other hand, CPA and affiliate marketing campaigns are publisher-centric. Advertisers cede control over where their brand will appear, as publishers browse offers and pick which to run on their websites. Advertisers generally do not know where their offer is running.
CPL campaigns are usually high volume and light-weight.In CPL campaigns, consumers submit only basic contact information. The transaction can be as simple as an email address. On the other hand, CPA campaigns are usually low volume and complex. Typically, consumer has to submit credit card and other detailed information.

Effective cost per action
A related term, eCPA or Effective Cost Per Action, is used to measure the effectiveness of advertising inventory purchased (by the advertiser) via a CPC, CPI, or CPM basis.
In other words, the eCPA tells the advertiser what they would have paid if they purchased the advertising inventory on a Cost Per Action basis (instead of a Cost Per Click, Cost Per Impression, or Cost Per Mile/Thousand basis).

Companies
Dozens of smaller companies have addressed the majority of the cost-per-action advertising network market, including companies like Commission Junction, Performics, and others including new entrants such as W4.
Google started testing CPA on 2006. On June 2007 Google expanded its beta trial, opening it to users of AdWords As of October, 2008, Google has discontinued their pay-per-action beta in favor of an offering by Google owned DoubleClick.
eBay has moved into CPA advertising with its AdContext system on 2006.
Snap.com, CPA pioneer and later merged with other to form NBC Internet (NBCi), has long touted the advantages of the CPA model, such as the elimination of click fraud.
Jellyfish.com was the Internet's first comparison shopping search engine to operate exclusively on a Cost Per Action (CPA) ad model, has a patent pending on an improvement over CPA where part of the ad revenue goes to the customer, and has been bought by Microsoft for integration into Live Search.

Cost Per Click

Pay per click (PPC) is an Internet advertising model used on websites, in which advertisers pay their host only when their ad is clicked. With search engines, advertisers typically bid on keyword phrases relevant to their target market. Content sites commonly charge a fixed price per click rather than use a bidding system.
Cost per click (CPC) is the amount of money an advertiser pays search engines and other Internet publishers for a single click on its advertisement that brings one visitor to its website.
In contrast to the generalized portal, which seeks to drive a high volume of traffic to one site, PPC implements so called affiliate model, that provides purchase opportunities wherever people may be surfing. It does this by offering financial incentives (in the form of a percentage of revenue) to affiliated partner sites. The affiliates provide purchase-point click-through to the merchant. It is a pay-for-performance model -- if an affiliate does not generate sales, it represents no cost to the merchant. The affiliate model is inherently well-suited to the web, which explains its popularity. Variations include, banner exchange, pay-per-click, and revenue sharing programs.
Websites that utilize PPC ads will display an advertisement when a keyword query matches an advertiser's keyword list, or when a content site displays relevant content. Such advertisements are called sponsored links or sponsored ads, and appear adjacent to or above organic results on search engine results pages, or anywhere a web developer chooses on a content site.
Although many PPC providers exist, Google AdWords, Yahoo! Search Marketing, and Microsoft adCenter are the three largest network operators, and all three operate under a bid-based model. Cost per click (CPC) varies depending on the search engine and the level of competition for a particular keyword.
The PPC advertising model is open to abuse through click fraud, although Google and others have implemented automated systems to guard against abusive clicks by competitors or corrupt web developers.

Determining cost per click
There are two primary models for determining cost per click: flat-rate and bid-based. In both cases the advertiser must consider the potential value of a click from a given source. This value is based on the type of individual the advertiser is expecting to receive as a visitor to his or her website, and what the advertiser can gain from that visit, usually revenue, both in the short term as well as in the long term. As with other forms of advertising targeting is key, and factors that often play into PPC campaigns include the target's interest (often defined by a search term they have entered into a search engine, or the content of a page that they are browsing), intent (e.g. to purchase or not), location (for geo targeting), and the day and time that they are browsing.

Flat-rate PPC
In the flat-rate model, the advertiser and publisher agree upon a fixed amount that will be paid for each click. In many cases the publisher has a rate card that lists the CPC within different areas of their website or network. These various amounts are often related to the content on pages, with content that generally attracts more valuable visitors having a higher CPC than content that attracts less valuable visitors. However, in many cases advertisers can negotiate lower rates, especially when committing to a long-term or high-value contract.
The flat-rate model is particularly common to comparison shopping engines, which typically publish rate cards.[2] However, these rates are sometimes minima, and advertisers can pay more for greater visibility. These sites are usually neatly compartmentalized into product or service categories, allowing a high degree of targeting by advertisers. In many cases, the entire core content of these sites is paid ads.

Bid-based PPC
In the bid-based model, the advertiser signs a contract that allows them to compete against other advertisers in a private auction hosted by a publisher or, more commonly, an advertising network. Each advertiser informs the host of the maximum amount that he or she is willing to pay for a given ad spot (often based on a keyword), usually using online tools to do so. The auction plays out in an automated fashion every time a visitor triggers the ad spot.
When the ad spot is part of a search engine results page (SERP), the automated auction takes place whenever a search for the keyword that is being bid upon occurs. All bids for the keyword that target the searcher's geo-location, the day and time of the search, etc. are then compared and the winner determined. In situations where there are multiple ad spots, a common occurrence on SERPs, there can be multiple winners whose positions on the page are influenced by the amount each has bid. The ad with the highest bid generally shows up first, though additional factors such as ad quality and relevance can sometimes come into play (see Quality Score).
In addition to ad spots on SERPs, the major advertising networks allow for contextual ads to be placed on the properties of 3rd-parties with whom they have partnered. These publishers sign up to host ads on behalf of the network. In return, they receive a portion of the ad revenue that the network generates, which can be anywhere from 50% to over 80% of the gross revenue paid by advertisers. These properties are often referred to as a content network and the ads on them as contextual ads due to the fact that the ad spots are associated with keywords based on the context of the page on which they are found. In general, ads on content networks have a much lower click-through rate (CTR) and conversion rate (CR) than ads found on SERPs and consequently are less highly valued. Content network properties can include websites, newsletters, and e-mails.
Advertisers pay for each click they receive, with the actual amount paid based on the amount bid. It is common practice amongst auction hosts to charge a winning bidder just slightly more (e.g. one penny) than the next highest bidder or the actual amount bid, whichever is lower[4]. This avoids situations where bidders are constantly adjusting their bids by very small amounts to see if they can still win the auction while paying just a little bit less per click.
To maximize success and achieve scale, automated bid management systems can be deployed. These systems can be used directly by the advertiser, though they are more commonly used by advertising agencies that offer PPC bid management as a service. These tools generally allow for bid management at scale, with thousands or even millions of PPC bids controlled by a highly automated system. The system generally sets each bid based on the goal that has been set for it, such as maximize profit, maximize traffic at breakeven, and so forth. The system is usually tied into the advertiser's website and fed the results of each click, which then allows it to set bids. The effectiveness of these systems is directly related to the quality and quantity of the performance data that they have to work with - low-traffic ads can lead to a scarcity of data problem that renders many bid management tools useless at worst, or inefficient at best.

History
In February 1998 Jeffrey Brewer of Goto.com, a 25-employee startup company (later Overture, now part of Yahoo!), presented a pay per click search engine proof-of-concept to the TED conference in California. This presentation and the events that followed created the PPC advertising system. Credit for the concept of the PPC model is generally given to Idealab and Goto.com founder, Bill Gross.
Google started search engine advertising in December 1999. It was not until October 2000 that the AdWords system was introduced, allowing advertisers to create text ads for placement on the Google search engine. However, PPC was only introduced in 2002; until then, advertisements were charged at cost-per-thousand impressions. Yahoo! advertisements have been PPC-based since their introduction in 1998.

Click Through Rate

Click-through rate or CTR is a way of measuring the success of an online advertising campaign. A CTR is obtained by dividing the number of users who clicked on an ad on a web page by the number of times the ad was delivered (impressions). For example, if a banner ad was delivered 100 times (impressions delivered) and one person clicked on it (clicks recorded), then the resulting CTR would be 1 percent.
Banner ad click-through rates have fallen over time, currently averaging much less than 1 percent.[citation needed] In most cases, a 2% click-through rate would be considered very successful.[citation needed] By selecting an appropriate advertising site with high affinity (e.g. a movie magazine for a movie advertisement), the same banner can achieve a substantially higher CTR. Personalized ads, unusual formats, and more obtrusive ads typically have higher click-through rates than standard banner ads.[citation needed]
CTR is most commonly defined as number of clicks divided by number of impressions and generally not in terms of the number of persons who clicked divided by the number of impressions.[citation needed] This is an important distinction. As a person clicks a single advertisement multiple times, the CTR increases using the latter definition, whereas the CTR doesn't change using the former definition.

Pay per click

Pay per click (PPC) is an Internet advertising model used on websites, in which advertisers pay their host only when their ad is clicked. With search engines, advertisers typically bid on keyword phrases relevant to their target market. Content sites commonly charge a fixed price per click rather than use a bidding system.
Cost per click (CPC) is the amount of money an advertiser pays search engines and other Internet publishers for a single click on its advertisement that brings one visitor to its website.
In contrast to the generalized portal, which seeks to drive a high volume of traffic to one site, PPC implements so called affiliate model, that provides purchase opportunities wherever people may be surfing. It does this by offering financial incentives (in the form of a percentage of revenue) to affiliated partner sites. The affiliates provide purchase-point click-through to the merchant. It is a pay-for-performance model -- if an affiliate does not generate sales, it represents no cost to the merchant. The affiliate model is inherently well-suited to the web, which explains its popularity. Variations include, banner exchange, pay-per-click, and revenue sharing programs.
Websites that utilize PPC ads will display an advertisement when a keyword query matches an advertiser's keyword list, or when a content site displays relevant content. Such advertisements are called sponsored links or sponsored ads, and appear adjacent to or above organic results on search engine results pages, or anywhere a web developer chooses on a content site.
Although many PPC providers exist, Google AdWords, Yahoo! Search Marketing, and Microsoft adCenter are the three largest network operators, and all three operate under a bid-based model. Cost per click (CPC) varies depending on the search engine and the level of competition for a particular keyword.
The PPC advertising model is open to abuse through click fraud, although Google and others have implemented automated systems to guard against abusive clicks by competitors or corrupt web developers.

Determining cost per click
There are two primary models for determining cost per click: flat-rate and bid-based. In both cases the advertiser must consider the potential value of a click from a given source. This value is based on the type of individual the advertiser is expecting to receive as a visitor to his or her website, and what the advertiser can gain from that visit, usually revenue, both in the short term as well as in the long term. As with other forms of advertising targeting is key, and factors that often play into PPC campaigns include the target's interest (often defined by a search term they have entered into a search engine, or the content of a page that they are browsing), intent (e.g. to purchase or not), location (for geo targeting), and the day and time that they are browsing.

Flat-rate PPC
In the flat-rate model, the advertiser and publisher agree upon a fixed amount that will be paid for each click. In many cases the publisher has a rate card that lists the CPC within different areas of their website or network. These various amounts are often related to the content on pages, with content that generally attracts more valuable visitors having a higher CPC than content that attracts less valuable visitors. However, in many cases advertisers can negotiate lower rates, especially when committing to a long-term or high-value contract.
The flat-rate model is particularly common to comparison shopping engines, which typically publish rate cards. However, these rates are sometimes minima, and advertisers can pay more for greater visibility. These sites are usually neatly compartmentalized into product or service categories, allowing a high degree of targeting by advertisers. In many cases, the entire core content of these sites is paid ads.

Bid-based PPC
In the bid-based model, the advertiser signs a contract that allows them to compete against other advertisers in a private auction hosted by a publisher or, more commonly, an advertising network. Each advertiser informs the host of the maximum amount that he or she is willing to pay for a given ad spot (often based on a keyword), usually using online tools to do so. The auction plays out in an automated fashion every time a visitor triggers the ad spot.
When the ad spot is part of a search engine results page (SERP), the automated auction takes place whenever a search for the keyword that is being bid upon occurs. All bids for the keyword that target the searcher's geo-location, the day and time of the search, etc. are then compared and the winner determined. In situations where there are multiple ad spots, a common occurrence on SERPs, there can be multiple winners whose positions on the page are influenced by the amount each has bid. The ad with the highest bid generally shows up first, though additional factors such as ad quality and relevance can sometimes come into play (see Quality Score).
In addition to ad spots on SERPs, the major advertising networks allow for contextual ads to be placed on the properties of 3rd-parties with whom they have partnered. These publishers sign up to host ads on behalf of the network. In return, they receive a portion of the ad revenue that the network generates, which can be anywhere from 50% to over 80% of the gross revenue paid by advertisers. These properties are often referred to as a content network and the ads on them as contextual ads due to the fact that the ad spots are associated with keywords based on the context of the page on which they are found. In general, ads on content networks have a much lower click-through rate (CTR) and conversion rate (CR) than ads found on SERPs and consequently are less highly valued. Content network properties can include websites, newsletters, and e-mails.
Advertisers pay for each click they receive, with the actual amount paid based on the amount bid. It is common practice amongst auction hosts to charge a winning bidder just slightly more (e.g. one penny) than the next highest bidder or the actual amount bid, whichever is lower[4]. This avoids situations where bidders are constantly adjusting their bids by very small amounts to see if they can still win the auction while paying just a little bit less per click.
To maximize success and achieve scale, automated bid management systems can be deployed. These systems can be used directly by the advertiser, though they are more commonly used by advertising agencies that offer PPC bid management as a service. These tools generally allow for bid management at scale, with thousands or even millions of PPC bids controlled by a highly automated system. The system generally sets each bid based on the goal that has been set for it, such as maximize profit, maximize traffic at breakeven, and so forth. The system is usually tied into the advertiser's website and fed the results of each click, which then allows it to set bids. The effectiveness of these systems is directly related to the quality and quantity of the performance data that they have to work with - low-traffic ads can lead to a scarcity of data problem that renders many bid management tools useless at worst, or inefficient at best.

History
In February 1998 Jeffrey Brewer of Goto.com, a 25-employee startup company (later Overture, now part of Yahoo!), presented a pay per click search engine proof-of-concept to the TED conference in California.[5] This presentation and the events that followed created the PPC advertising system. Credit for the concept of the PPC model is generally given to Idealab and Goto.com founder, Bill Gross.
Google started search engine advertising in December 1999. It was not until October 2000 that the AdWords system was introduced, allowing advertisers to create text ads for placement on the Google search engine. However, PPC was only introduced in 2002; until then, advertisements were charged at cost-per-thousand impressions. Yahoo! advertisements have been PPC-based since their introduction in 1998.
For a more in-depth presentation of PPC's history, see Fain and Pedersen (2006)

Search Enign Optimization

Search Engine Optimization (SEO) Copywriting is textual composition for web page marketing that emphasizes skillful manipulation of the page's wording to place it among the first results of a user's search list, while still producing readable and persuasive content.
The text appearing at specific locations, such as in the title tag and the Meta Tag of the page's code, gets special attention during SEO, because search engines compare information found there with other pages to determine relevance. However, SEO copywriters also strive for unique written content on the page, distinguishing it from similar pages competing for placement in the search results. Other factors that determine relevance during a search are the page's Keyword Density, the placement of the keywords, and the number of links to and from the page from other pages.
SEO copywriting is most often one of the various jobs of a copywriter. However, there are freelance copywriters who hire out their services solely for SEO, agencies and firms that specialize in SEO (including SEO copywriting), and copywriting agencies that offer SEO copywriting as part of comprehensive writing and editing services.
While an obvious goal of SEO copywriting is to cause the business's or product's web page to rank highly in a search, most experts in the field would argue that it is of secondary priority. The foremost goal of SEO copywriting is to produce succint, effectively persuasive text for a well-written web page. Writing that "optimizes" a search, but which offers little useful information or only weak persuasion, is frowned upon in the profession as at best ineffective. At its worst, it becomes a costly resource inducing potential buyers to turn away from the site rather than generating sales.
SEO copywriters often work with "optimizers" who are more expert in the technical aspects of SEO. Together they will not only rewrite text but also alter the code to design a page that is most favored by search engines. It is not a clear, scientific process, however. Attempting to keep themselves competitive and defending against the composition strategies of so-called black hat SEOs, search engine designers today do not disclose the complex algorithmic processes of their search engines. In spite of the insights of optimizing technicians, SEO copywriting requires finesse and repeated experimentation to assess how the team's page revisions will fare in a potential customer's search.

Google Adsense

AdSense is an ad serving application run by Google Inc. Website owners can enroll in this program to enable text, image, and more recently, video advertisements on their websites. These advertisements are administered by Google and generate revenue on either a per-click or per-impression basis. Google beta tested a cost-per-action service, but discontinued it in October 2008 in favor of a DoubleClick offering (also owned by Google).

Overview
Google uses its Internet search technology to serve advertisements based on website content, the user's geographical location, and other factors. Those wanting to advertise with Google's targeted advertisement system may enroll through AdWords. AdSense has become a popular method of placing advertising on a website because the advertisements are less intrusive than most banners, and the content of the advertisements is often relevant to the website.
Many websites use AdSense to monetize their content. AdSense has been particularly important for delivering advertising revenue to small websites that do not have the resources for developing advertising sales programs and sales people. To fill a website with advertisements that are relevant to the topics discussed, webmasters implement a brief script on the websites' pages. Websites that are content-rich have been very successful with this advertising program, as noted in a number of publisher case studies on the AdSense website.
Some webmasters invest significant effort into maximizing their own AdSense income. They do this in three ways:[citation needed]
They use a wide range of traffic-generating techniques, including but not limited to online advertising.
They build valuable content on their websites that attracts AdSense advertisements, which pay out the most when they are clicked.
They use text content on their websites that encourages visitors to click on advertisements. Note that Google prohibits webmasters from using phrases like "Click on my AdSense ads" to increase click rates. The phrases accepted are "Sponsored Links" and "Advertisements".
The source of all AdSense income is the AdWords program, which in turn has a complex pricing model based on a Vickrey second price auction. AdSense commands an advertiser to submit a sealed bid (i.e., a bid not observable by competitors). Additionally, for any given click received, advertisers only pay one bid increment above the second-highest bid.

History
Oingo, Inc., a privately held company located in Los Angeles, was started in 1998 by Gilad Elbaz and Adam Weissman. Oingo developed a proprietary search algorithm that was based on word meanings and built upon an underlying lexicon called WordNet, which was developed over the previous 15 years by researchers at Princeton University, led by George Miller.
Oingo changed its name to Applied Semantics in 2001, which was later acquired by Google in April 2003 for US$102 million.

Types

AdSense for Feeds
In May 2005, Google announced a limited-participation beta version of AdSense for Feeds, a version of AdSense that runs on RSS and Atom feeds that have more than 100 active subscribers. According to the Official Google Blog, "advertisers have their ads placed in the most appropriate feed articles; publishers are paid for their original content; readers see relevant advertising—and in the long run, more quality feeds to choose from."
AdSense for Feeds works by inserting images into a feed. When the image is displayed by a RSS reader or Web browser, Google writes the advertising content into the image that it returns. The advertisement content is chosen based on the content of the feed surrounding the image. When the user clicks the image, he or she is redirected to the advertiser's website in the same way as regular AdSense advertisements.
AdSense for Feeds remained in its beta state until August 15, 2008, when it became available to all AdSense users.

AdSense for search
A companion to the regular AdSense program, AdSense for search, allows website owners to place Google search boxes on their websites. When a user searches the Internet or the website with the search box, Google shares any advertising revenue it makes from those searches with the website owner. However the publisher is paid only if the advertisements on the page are clicked: AdSense does not pay publishers for mere searches.

AdSense for mobile content
AdSense for mobile content allows publishers to generate earnings from their mobile websites using targeted Google advertisements. Just like AdSense for content, Google matches advertisements to the content of a website — in this case, a mobile website.

AdSense for domains
Adsense for domains allows advertisements to be placed on domain names that have not been developed. This offers domain name owners a way to monetize domain names that are otherwise dormant. Adsense for domains is currently being offered to some users, with plans to make it available to all in stages.
On December 12, 2008, TechCrunch reported that AdSense for Domains is available for all US publishers.

AdSense for video
AdSense for video allows publishers with video content to generate revenue using ad placements from Google's extensive Advertising network. AdSense for video display both InVideo overlay and text overlay ads.

XHTML compatibility
As of September 2007, the HTML code for the AdSense search box does not validate as XHTML, and does not follow modern principles of website design because of its use of
non-standard end tags, such as and ,
the attribute checked rather than checked="checked",
presentational attributes other than id, class, or style — for example, bgcolor and align,
a table structure for purely presentational (i.e., non-tabular) purposes,1 and
the font tag.2
1: using a table structure for unintended purposes is strongly recommended against by the W3C[citation needed], but nevertheless does not cause a document to fail validation — there is currently no algorithmic method of determining whether a table is used "correctly" (for displaying tabular data or for displaying elements, that get proportionally wider or narrower when browser window resizes in width without active client side scripting).2: the font tag is deprecated but does not fail validation in any XHTML standard.
Additionally, the AdSense advertisement units use the JavaScript method document.write(), which does not work correctly when rendered with the application/xhtml+xml MIME type. The units also use the iframe HTML tag, which is not validated correctly with the XHTML 1.0 Strict or XHTML 1.0 Transitional DOCTYPEs.
The terms of the AdSense program forbid its affiliates from modifying the code, thus preventing these participants from having valid XHTML websites.
However, a workaround has been found by creating a separate HTML webpage containing only the AdSense advertisement units, and then importing this page into an XHTML webpage with an object tag. This workaround appears to be accepted by Google.

How AdSense works

This article contains instructions, advice, or how-to content. The purpose of Wikipedia is to present facts, not to train. Please help improve this article either by rewriting the how-to content or by moving it to Wikiversity or Wikibooks.
The webmaster inserts the AdSense JavaScript code into a webpage.
Each time this page is visited, the JavaScript code uses inlined JSON to display content fetched from Google's servers.
For contextual advertisements, Google's servers use a cache of the page to determine a set of high-value keywords. If keywords have been cached already, advertisements are served for those keywords based on the AdWords bidding system. (More details are described in the AdSense patent.)
For site-targeted advertisements, the advertiser chooses the page(s) on which to display advertisements, and pays based on cost per mille (CPM), or the price advertisers choose to pay for every thousand advertisements displayed.
For referrals, Google adds money to the advertiser's account when visitors either download the referred software or subscribe to the referred service. The referral program was retired in August 2008.
Search advertisements are added to the list of results after the visitor performs a search.
Because the JavaScript is sent to the Web browser when the page is requested, it is possible for other website owners to copy the JavaScript code into their own webpages. To protect against this type of fraud, AdSense customers can specify the pages on which advertisements should be shown. AdSense then ignores clicks from pages other than those specified.

Abuse
Some webmasters create websites tailored to lure searchers from Google and other engines onto their AdSense website to make money from clicks. These "zombie" websites often contain nothing but a large amount of interconnected, automated content (e.g., a directory with content from the Open Directory Project, or scraper websites relying on RSS feeds for content). Possibly the most popular form of such "AdSense farms" are splogs (spam blogs), which are centered around known high-paying keywords. Many of these websites use content from other websites, such as Wikipedia, to attract visitors. These and related approaches are considered to be search engine spam and can be reported to Google.[citation needed]
A Made for AdSense (MFA) website or webpage has little or no content, but is filled with advertisements so that users have no choice but to click on advertisements. Such pages were tolerated in the past, but due to complaints, Google now disables such accounts.
There have also been reports of Trojan horses engineered to produce counterfeit Google advertisements that are formatted looking like legitimate ones. The Trojan downloads itself onto an unsuspecting computer through a webpage and then replaces the original advertisements with its own set of malicious advertisements.

Criticism
Due to concerns about click fraud, 'Google AdSense' has been criticized by some search engine optimization firms as a large source of what Google calls "invalid clicks", in which one company clicks on a rival's search engine advertisements to drive up the other company's costs.[14]
To help prevent click fraud, AdSense publishers can choose from a number of click-tracking programs.[citation needed] These programs display detailed information about the visitors who click on the AdSense advertisements. Publishers can use this to determine whether or not they have been a victim of click fraud. There are a number of commercial tracking scripts available for purchase.
The payment terms for webmasters have also been criticized. Google withholds payment until an account reaches US$100, but many micro content providers[citation needed] require a long time—years in some cases—to build up this much AdSense revenue. However, Google will pay all earned revenue greater than US$10 when an AdSense account is closed.
Many website owners complain that their AdSense accounts have been disabled just before they were supposed to receive their first paycheck from Google. Google claims accounts have been disabled due to click fraud.[citation needed]
Google came under fire when the official Google AdSense Blog showcased the French video website Imineo.com. This website violated Google's AdSense Program Policies by displaying AdSense alongside sexually explicit material. Typically, websites displaying AdSense have been banned from showing such content. Some sites have been banned for distributing copyright material even when they hold the copyright themselves or are authorized by the copyright holder to distribute the material.
It has been reported that using both AdSense and AdWords may cause a website to pay Google a commission when the website advertises itself.
In some cases, AdSense displays inappropriate or offensive ads. For example, in a news story about a terrorist attack in India, an advert was generated for a (presumably non-existent) educational qualification in terrorism.