Pay per click (PPC) marketing has two approaches, the bid-based and the flat rate PPC. In the bid-based approach, competition is always a factor.
In this kind of arrangement, the publisher or the website owner will often show interest that there is a part, or parts in his website that he will be opening for interested advertisers. If there are a number of interested advertisers who are willing to place their ads on that site, then these advertisers are often required to sign the contract and thru the contract, these advertisers will have to compete with each other for the right to get the prime spot of the publisher.
In the marketing called pay per click that adopts the bid-based model, the advertisers are asked to submit a figure of the maximum amount that they are willing to pay for the advertising spot. The identification of the cost will be influenced by the targeted keyword. Auction will then proceed automatically the moment a user or a web surfer clicked on the advertising spot.
In the case of ad space that appears on the web listings of a search engine, bidding will start when an online user types in the keywords of what he is searching on the web.
All the information related to the bids are then collected and compared. This includes the bids on the keywords, the date and the time that a certain user clicked on the ad. The best offer from among the advertisers is then selected as winner.
This is the case when only one ad spot is being opened for bidding. If there are multiple advertisement spaces, multiple advertisers can also win different ad spots on the website. It is also easy to know the winning advertisement since it will be the first to show up.
The winner of the bidding is usually determined by the amount the advertiser is willing to pay, but other factors also determine the winning bid. These factors include relevance of the ad and quality of the ad.
