Pay per click (PPC) refers to a payment model in the e-commerce environment, in which a commission for each click on an advertisement is paid.1) The advertiser only pays for potential buyers who click on the ad, not for showing the advertising medium. The actual price of a single click for the advertiser is called Cost per Click (CPC).2)
In 1996 Scott Banister (at the time it was only 18 years old) came up with the idea of charging search advertisers by the click with ads tied to the search keyword. When he presented his idea to Yahoo! they couldn't see the potential of search, maybe attracted more by easy money, but in 1998 somebody could finally run with this idea: IdeaLab's Bill Gross. In that year he launched Overture (formerly GoTo), the pioneer in paid search. His idea was to arbitrage traffic streams and sell them with a level of accountability. 3).
The strength of GoTo was that while other search engines sorted their results in order of algorithmically assessed relevancy to the user’s query, GoTo.com had a new twist – they auctioned their results to the highest bidder. Following steps will show you how it works:
In February 2002, Google introduced Adwords Select. This was a PPC programme with a number of key innovations:
Source: Ellam, Andrew. "Overture and Google: Internet Pay-Per-Click (PPC) Advertising Auctions". London Business School (March 2003):3.
Paid listings confuse web searchers | PC World
D. C. Fain and J. O. Pedersen (2006)."Sponsored Search: A Brief History." | Bulletin of the American Society for Information Science and Technology. 32(2), 12-13. Retrieved May 18, 2010.