Paid Search Marketing is a complete illustration of a Win-Win business model In fact it is a Win-Win-Win model as there are no losers. Maybe that is not solely true, but the only loss to factor in is the small risk of aliening some potential clients.

Let’s take it in more depth. Firstly the main service provider, say one of the principal search engine companies, allows their customers to bid for key words or choose on a maximum cost per click. The customer must carry out a cost profit analysis in order to decide the maximum they are willing to pay for the amount of traffic they wish to drive to their website. Initially they may choose a non-optimal strategy but as they gain experience this will be refined. Eventually they will develop a clear scheme which will almost certainly contain dynamic elements that they can fine tune to match market tidal flows and other imbalances and discontinuities. They are happy bunnies paying the right price for the service. They are winning.

The provider is also a winner. They look at the price their customer has decided to pay in terms of the bid price along with other factors. They assign what is termed an Ad Rank. The manner in which this is assigned varies between companies, but one major search engine uses a formula that include the price, the click through rate, the cost per click and what they call a quality score. The quality score is a measure of the relevance of the chosen keyword (you can use a keyword tracking tool for this) to the context of the advert. The higher the Ad Rank the more prominent the position of the ad on the search page. Paid Search Marketing is the major, if not the only, income wage earner for the major participants. They have invested considerably in the developing of these services which are now generating a significant income.