History on Pay Per Marketing (PPC); How did PPC Change Online Advertising?

History of PPC
History on Pay Per Marketing (PPC); How did PPC Change Online Advertising?



There are times when sales were done on do door-to-door basis by a sales person and visiting each house, explaining product/service features.  The evolution of internet has brought a drastic change to the concept of sales as well.  Another major breakthrough happened in in February 1998 when Jeffrey Brewer of Goto.com and Bill Gross of Idealab presented the concept of pay per click search engine.  This brought revolutionary change to toward sales promotions which happened over a period of time in the later years.   The explanation of proof-of concept happened at the TED (Technology, Entertainment and Design) conference in California.  Thus, the credit for the PPC model need to be given to Idealab and Goto.com founder Bill Gross.

Selling banner ads on its own search results seemed to be an option for realizing ads revenue till that time for many online portals.  But Sergey Brin and Larry Page (Google Founders) hated the idea.  They thought that banner ads were ugly and distracting.  Later, when Brin and Page tackled the problem with algorithms, Gross approached it on commercial view point.  Thus, Gross introduced a twist to the concept of paid search.  It was common in the yellow page industries to pay premium for placing ads in top position, and hence the option of asking higher amount for top placement on the Goto.Com emerged for a given keyword.  This would push down spam results, Gross reasoned, because companies would have an incentive to buy ads for search terms that were actually relative to their products.  To drive home just how efficient these ads could be, Gross came up with an audacious pricing scheme.

Instead paying for the page-views, advertisers were asked pay only when people actually click their ads.  And their placement on the search engine results page would be determined through an auction, so that more desirable keywords could go for as little as penny per click.  As a search engine Goto.com was nothing but as a way of making money on searches it was ingenious.

And then into the frame GOOGLE came like it is said “Google didn’t invent search, they reinvented search”.  They didn’t invent mail, they reinvented email likewise they reimagine the idea of Gross, and came up with a “Quality score” to each ad to punish those that were spammy or off topic.  Effect of quality score can be judged by the influence of quality score in the following formulae;

Your Price= (The ad rank of the person below you/Your quality score)*factor+0.01$.

Google and others have implemented automated systems to guard against abusive click by competitors and other web developers.  It is widely used in determining the effectiveness in internet advertising, and can be used for comparison across advertising media and vehicles and as an indicator of the profitability of a firm’s marketing.