If I, for example, click a google ad for a local car dealership; does Google record that click and charge a specific amount to the advertiser? Or is pricing calculated based on other factors like time spent on the site after ad clicks?
I’m very curious about the microeconomics of online advertising, like how much is getting spent to expose me to certain ads. But all information I’ve found so far is pretty vague
In: Technology
Online advertisements are pretty tricky.
My understanding is that Google holds a bit of an auction to fill available as spaces and gives it to the highest paying advertiser.
Google and websites earn a couple cents for every thousand ads they show. Video ads pay better than static images.
Google themselves don’t keep track of when a user clicks an ad. It’s the advertiser, who may pay Google and the website a royalty for the user clicking on the ad. They would be keeping track of clicks through a monitored link that logs the amount of times any particular ad is clicked.
For search & display advertisements typically it’s a PPC model online advertisers use where let’s say I click on an advertisement, the advertiser pays x amount to Google for my click on their ad. How is it determined whose advertisement shows up when I search something? How that works is the advertiser bids on keywords that they feel confident will attract users from their preferred target market to their site in hopes of getting leads which are potential buyers in hopes of actually converting them into customers.
For a ball park range for pricing, in Q1 of 2018 the avg CPC(cost per click, which is how much you actually pay per click) was 0.75c. Bids among advertisers are influenced by different factors such as ad rank of competitors, quality score, your own ad rank, etc.
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