What is CPC?

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This is from wikipedia

Cost Per Click or CPC (as it is often initialized to) is a phrase often used in online advertising and online marketing circles.

With many advertising networks and websites, the advertiser is charged for advertising their ad (on the advertising network or website) only when a user clicks on their ad. How much they pay (for that click) is called their Cost Per Click or CPC.

The CPC can be determined by different factors, depending on which advertising network or website the advertiser is advertising on.

CPC is the best kind of advertising (IMHO) because when people click your ads, if you didnt make something extremely generic, you are getting quality, targeted traffic that is interested in your site or product. Definitely the way to go.

Adwords forever!

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plus it is the only real 'performance based' advertising

CPC is definately the best for a certain kind of site, but if your visitors are likely to be distracted while viewing your page (by a game, a video, etc.) you might want to consider Pay Per Popup instead.
Tom

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Pay Per Click Definitions

Pay-Per-Click marketing has become an online phenomenon, with marketers only paying for traffic they receive. As Internet marketing has evolved, pay-per-click is seen by many as the middle ground between paying per impression and paying per sale. Advertisers only pay when they receive traffic that may or may not be targeted.

The pay-per-click advertisements are usually displayed with the advertisement from the highest paying bidder in the top position. Navigating the complex web of Internet marketing, publishers and marketers are often confronted with terms that seem foreign. This simple guide will assist marketers in navigating the Pay-Per-Click marketing model.

• Bid - The amount that an advertiser is willing to pay for a click on a specific keyword.
• Budget - The amount of money that an advertiser sets aside for an advertising campaign. Different publishers allow for advertisers to set daily, weekly or monthly budgets.
• Clickthrough Rate (CTR) - The percentage of clicks on a link. This is usually a percentage based on the total number of clicks divided by the number of impressions that an advertisement has received.
• Conversion Rate - The relationship between visitors to a web site and actions considered to be a "conversion", such as a sale or request to receive more information: the percentage of people whose clicks have resulted in a sale or desired action in relation to the total number of clicks on an advertisement.
• Cost Per Click (CPC) - The cost or cost-equivalent paid per click-through to an advertiser's website.
• Cost Per Thousand (CPM) - The amount an advertiser pays for one thousand advertisement impressions, regardless of the consumer's subsequent actions.
• Delisting - The removal of a listing as a result of inaction or poor performance.
• GeoTargetting - An advertisement targeted at a specific geographical region, area or location.
• Impressions - The number of times an advertisement is viewed by web surfers.
• Keywords - Search terms or phrases that are related to an advertisement or ad copy.
• Landing Page - The specific web page that a visitor ultimately reaches after clicking an advertisement. Often, this page is optimized for a specific keyword term or phrase.
• Linking Text - The text that is contained within a link.
• Pay Per Click (PPC) - Advertising model in which advertisers pay for click-throughs to their website. Ads are served based on keywords or themes.
• Rank - How well a particular web page or web site is listed in a search engine or advertising results.
• Return On Investment (ROI) - The percentage of profit that results in a marketing or advertising campaign. Naturally, advertisers want the amount of money made to exceed the money spent.

Understanding the above terminology will help marketers navigate the pay-per-click advertising model, which has emerged on the Internet and become one of the leading advertising models in the online world.

About the Author:
Sharon Housley manages marketing for FeedForAll software for creating, editing, publishing RSS feeds and podcasts. In addition Sharon manages marketing for NotePage a wireless text messaging software company.

PS: I found this great article through adminFusion

Yep that explains it just fine.

Maybe it should be mentioned that Google is the only CPC publisher that actively influences your click costs with smart pricing. 

That's a great point. I could see where an advertiser would bid a low amount, expecting not to pay too much, and if they aren't careful suddenly be paying 50, 60, 70 cents for each click.

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