When we surf the internet, it is common to see advertisements of businesses hosted by websites. They often appear as boxed text advertisements, or colorful banners. Oftentimes, when search for something on the web, ads appear on top of the search results list or at the right hand side of the web page.

The placement of advertising banners is his own way of recouping whatever investment he has made when he presented the resources and the contents on his website to be used by the web surfers and readers.

There are many ways on how the site owner can earn from the advertisement banners that are posted on his site. And one way to earn money is when a user clicks on the banner. The site owner will earn if the arrangement with the advertiser is for pay per click marketing.

In pay per click advertising, the website owner will be paid only if there are users that click the posted ad. On the other hand, the advertiser’s cost will be dependent on the number of clicks of his ad.

Now in this advertising model called pay per click, two tools are used in determining the cost per click on the part of the advertiser or the earnings per click on the part of the site owner.

The first one is using a flat rate cost per click. In this way, the website owner and the advertiser agree on a flat rate that the website owner will be paid per click of the ad. This flat rate on the part of the advertiser is his cost for every click of the ad.

Advertisers often have a listing of their rates based on the page of the website their ads are shown. These fixed rates are based on the relevance of the site or webpage to his business, the resources of the site and the capability of the site to attract traffic from the web.

The other tool used now in determining the earning/cost per click is thru bidding. In this kind of the set-up the publisher may host a bidding activity participated in by advertisers interested on the ad spot of one publisher or website owner.

Cost per click in bidding is determined by the highest amount the advertiser is willing to pay per click of his ad in a certain website.