1) Pay per click
From Wikipedia, the free encyclopedia
Pay Per Click (PPC) is an Internet advertising model used on search engines, advertising networks, and content sites, such as blogs, 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.

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 other search engines have implemented automated systems to guard against abusive clicks by competitors or corrupt web developers.[1]

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 commiting 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 minimums and advertisers can pay more for greater visibility. These sites are usually neatly compartmentalized into product or service categories, which allows for 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 occurance 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.[3]

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 it has 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 before 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 always been PPC-based since their introduction in 1998.
For a more in-depth presentation of PPC's history, see Fain and Pedersen (2006).[6]
How do you prevent invalid clicks and impressions?

Our specialists carefully monitor clicks and impressions on Google ads in order to protect your interests as well as those of our advertisers. To do this, we use both automated systems and human reviews, analyzing all ad clicks and impressions for any invalid click activity that may artificially drive up an advertiser's costs or a publisher's earnings.

Google's proprietary technology analyzes clicks and impressions to determine whether they fit a pattern of use that may artificially drive up an advertiser's costs or a publisher's earnings. Our system uses sophisticated filters to distinguish between activity generated through normal use by users and activity that may pose a risk to our AdWords advertisers. Some examples of this activity include clicks or impressions generated by unethical users, automated robots and traffic sources, and publishers encouraging clicks on their ads. Our system enables us to filter out most invalid clicks and impressions, and our advertisers are not charged for this activity.

In addition to our automated system, we have a team dedicated to detecting invalid activity using several specialized tools and a wide variety of techniques based on extensive experience tracking and monitoring user behavior and analyzing scenarios. We continually upgrade our detection mechanisms to proactively combat invalid activity.

E-Mail Marketing
E-mail marketing is a form of direct marketing which uses electronic mail as a means of communicating commercial or fundraising messages to an audience. In its broadest sense, every e-mail sent to a potential or current customer could be considered e-mail marketing. However, the term is usually used to refer to:
sending e-mails with the purpose of enhancing the relationship of a merchant with its current or previous customers and to encourage customer loyalty and repeat business, sending e-mails with the purpose of acquiring new customers or convincing current customers to purchase something immediately, adding advertisements to e-mails sent by other companies to their customers, and sending e-mails over the Internet, as e-mail did and does exist outside the Internet (e.g., network e-mail and FIDO).
Researchers estimate that United States firms alone spent US$400 million on e-mail marketing in 2006.[1]

Advantages
E-mail marketing (on the Internet) is popular with companies for several reasons:
A mailing list provides the ability to distribute information to a wide range of specific, potential customers at a relatively low cost.
Compared to other media investments such as direct mail or printed newsletters, e-mail is less expensive.
An exact return on investment can be tracked ("track to basket") and has proven to be high when done properly. E-mail marketing is often reported as second only to search marketing as the most effective online marketing tactic.[2]
The delivery time for an e-mail message is short (i.e., seconds or minutes) as compared to a mailed advertisement (i.e., one or more days).
An advertiser is able to "push" the message to its audience, as opposed to website-based advertising, which relies on a customer to visit that website.

E-mail messages are easy to track. An advertiser can track users via autoresponders, web bugs, bounce messages, unsubscribe requests, read receipts, click-throughs, etc. These mechanisms can be used to measure open rates, positive or negative responses, and to correlate sales with marketing.
Advertisers can generate repeat business affordably and automatically.
Advertisers can reach substantial numbers of e-mail subscribers who have opted in (i.e., consented) to receive e-mail communications on subjects of interest to them.
Over half of Internet users check or send e-mail on a typical day.[3]
Specific types of interaction with messages can trigger (1) other messages to be delivered automatically, or (2) other events, such as updating the profile of the recipient to indicate a specific interest category.
E-mail marketing is paper-free (i.e., "green").
Tracking and response metrics enables tuning and optimisation of the E-mail marketing channel by a process of testing different variants and calculation of statisticaly signficant results.

Disadvantages
Many companies use e-mail marketing to communicate with existing customers, but many other companies send unsolicited bulk e-mail, also known as spam.
Internet system administrators have always considered themselves responsible for dealing with "abuse of the net", but not "abuse on the net". That is, they will act quite vigorously against spam, but will leave issues such as libel or trademark infringement to the legal system. Most administrators possess a passionate dislike for spam, which they define as any unsolicited e-mail. Draconian measures—such as taking down a corporate website, with or without warning—are entirely normal responses to spamming. Typically, the terms of service in Internet companies' contracts permit such actions; therefore, the spammer often has no recourse.
Illicit e-mail marketing predates legitimate e-mail marketing. On the early Internet (i.e., Arpanet), it was not permitted to use the medium for commercial purposes. As a result, marketers attempting to establish themselves as legitimate businesses in e-mail marketing have had an uphill battle, hampered also by criminal spam operations billing themselves as legitimate ones.

It is frequently difficult for observers to distinguish between legitimate and spam e-mail marketing. First, spammers attempt to represent themselves as legitimate operators. Second, direct-marketing political groups such as the United States Direct Marketing Association (DMA) have pressured legislatures to legalize activities that some Internet operators consider to be spamming, such as the sending of "opt-out" unsolicited commercial e-mail. Third, the sheer volume of spam has led some users to mistake legitimate commercial e-mail for spam. This situation arises when a user receives e-mail from a mailing list to which he/she subscribes. Additional confusion arises when both legitimate and spam messages have a similar appearance, as when messages include HTML and graphics.

One effective technique used by established email marketing companies is to require what is known as the "double opt-in" method of requiring a potential recipient to manually confirm their request for information by clicking a unique link and entering a unique code identifier to confirm that the owner of the recipient email address has indeed requested the information. Responsible e-mail marketing and autoresponder companies use this double opt-in method to confirm each request before any information is sent out.
A report issued by the e-mail services company Return Path, as of mid-2008 e-mail deliverability is still an issue for legitimate marketers. According to the report, legitimate e-mail servers averaged a delivery rate of 56%; twenty percent of the messages were rejected, and eight percent were filtered.[4]

Due to the volume of spam e-mail on the Internet, spam filters are essential to most users. Some marketers report that legitimate commercial e-mail messages frequently get caught and hidden by filters; however, it is somewhat less common for e-mail users to complain that spam filters block legitimate mail.
Companies considering the use of an e-mail marketing program must make sure that their program does not violate spam laws such as the United States' Controlling the Assault of Non-Solicited Pornography and Marketing Act (CAN-SPAM),[5] the European Privacy and Electronic Communications Regulations 2003, or their Internet service provider's acceptable use policy. Even if a company adheres to the applicable laws, it can be blacklisted (e.g., on SPEWS) if Internet e-mail administrators determine that the company is sending spam.

 CAN-SPAM compliance
The CAN-SPAM Act of 2003 authorizes a US$11,000 penalty per violation for spamming each individual recipient. Therefore, many commercial e-mail marketers within the United States utilize a service or special software to ensure compliance with the Act. A variety of older systems exist that do not ensure compliance with the Act. To comply with the Act's regulation of commercial e-mail, services typically require users to authenticate their return address and include a valid physical address, provide a one-click unsubscribe feature, and prohibit importing lists of purchased addresses that may not have given valid permission.
In addition to satisfying legal requirements, e-mail service providers began to help customers establish and manage their own e-mail marketing campaigns. The service providers supply e-mail templates and general best practices, as well as methods for handling subscriptions and cancellations automatically. They also provide statistics pertaining to the number of messages received and opened, and whether the recipients clicked on any links within the messages.

The CAN-SPAM Act was recently updated with some new regulations that went into effect on July 7, 2008.
Opt-in e-mail advertising
Opt-in e-mail advertising, or permission marketing, is a method of advertising via e-mail whereby the recipient of the advertisement has consented to receive it. This method is one of several developed by marketers to eliminate the disadvantages of e-mail marketing.[6]
Opt-in e-mail marketing may evolve into a technology that uses a handshake protocol between the sender and receiver.[6] This system is intended to eventually result in a high degree of satisfaction between consumers and marketers. If opt-in e-mail advertising is used, the material that is e-mailed to consumers will be "anticipated". It is assumed that the consumer wants to receive it, which makes it unlike unsolicited advertisements sent to the consumer. Ideally, opt-in e-mail advertisements will be more personal and relevant to the consumer than untargeted advertisements.
A common example of permission marketing is a newsletter sent to an advertising firm's customers. Such newsletters inform customers of upcoming events or promotions, or new products.[7] In this type of advertising, a company that wants to send a newsletter to their customers may ask them at the point of purchase if they would like to receive the newsletter.
With a foundation of opted-in contact information stored in their database, marketers can send out promotional materials automatically. They can also segment their promotions to specific market segments.[8]