Advertisers typically bid on keyword phrases relevant to their brand or product. If an advertiser has shown maximum bid on it over the other advertisers, then he is likely to get the ad space. In contrast, some sites commonly charge a fixed price per click rather than using a bidding system. Pay-per-click is calculated by dividing the advertising cost by the number of clicks generated by an advertisement. The basic formula is: Pay-per-click ($) = Advertising cost ($) / Ads clicked (#)
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