Pay-per-Click (PPC) is a popular and fairly recent form of online advertising offered by the Search Engines.

Here’s how it works:

For a "per use" fee Search engines will place your ad on their search pages. Very briefly, visitors browsing a search engine can see your ad and click on it if they are interested. They are directed to a landing page of your design where they are hopeful of finding the information they are searching for. If they do then it may be to your mutual benefit.

The process is facilitated by the use of "keywords".

Keywords are search terms that people might enter into a search engine like Google or Yahoo, when they are searching for something on the internet. The advertiser (in this case you) needs to create a set of specific keywords that will be of interest to these searchers. These keywords should be relevant to the product you are promoting.

Now whenever a user searches for that keyword on the Search Engine, your ad will be among those appearing in the sponsored listings on the right hand side of the search page. If they see your ad and find it interesting they may "click" on your ad and visit your capture page. And if they like your webpage they might opt-in to your website and either buy something or join your business. Either way you will have a new lead on your list.

The search engine charges you for every time someone clicks on your ad. But if nothing happens there is no charge. This is a very attractive feature of Pay-per-Click" and is a big reason for it's popularity.

Now, ideally when they click, your ad will appear at the top of the first page displayed--or hopefully--at least in the first three pages. Searchers rarely go past page three before trying another search term.

Obviously appearing on Page 1000 is not going to do you a whole lot of good.

There are many merchants competing for traffic on the web so getting "clicks" is a very competitive business. Merchants bid against each other to get top placement on the search page listings because having your ad appear on the first page of the listings is a huge competitive advantage.

The minimum bid is one-cent and there is (to my knowledge) no maximum. Generally, the more you bid the higher you go up the rankings for that particular keyword. But Google has some arcane ways of ranking the performance of your ad so this may not always be the case.

Google’s PPC program is the most widely used. It goes by the name Google Adwords. If you are using Google AdWords your ad may also be placed on appropriate web pages of the Google Network. This can be a very effective exposure for your ad. The Google Network is the largest online advertising network available, reaching over 80% of 30 day US Internet users. On search sites in the Google Network, your ads could appear along side or above search results or as a part of a results page a user navigates to through a site's directory. Google's global search network includes Froogle and Google Groups.

You are charged whenever a user clicks on your ad. You are able to set limits on the Price-per-Click you are willing to pay for each ad and even for each keyword and also on the maximum daily amount you will spend.

Yahoo, MSN and other search engines also offer PPC programs.

If you are not familiar with any of these basic concepts you will find plenty of information on these topics by doing a search for "Pay per Click" and "Keywords" on your favorite search engine.