When we surf the internet, it is common to see advertisements of businesses hosted by websites. They often appear as boxed text advertisements, or colorful banners. Oftentimes, when search for something on the web, ads appear on top of the search results list or at the right hand side of the web page.

The putting up of ads in websites could be a way that the website owner can compensate for his time, effort or financial investment in putting up his website for internet use.

Among the number of ways to earn from hosting advertisements in your website is through pay per click advertising. It is a form of advertising online where the website owner hosting such advertisement banners is paid whenever internet users click the ad.

In the marketing called pay per click, the advertiser will only pay the site owner the moment a click has been made on the banner.

Now in this advertising model called pay per click, two tools are used in determining the cost per click on the part of the advertiser or the earnings per click on the part of the site owner.

One tool in determining the cost per click of these ad banners is the flat rate tool. In this tool, the advertiser will pay the website owner a flat rate if an internet user click the ad posted on his website. The advertiser and the site owner usually agree this flat rate.

Advertisers often have a listing of their rates based on the page of the website their ads are shown. These fixed rates are based on the relevance of the site or webpage to his business, the resources of the site and the capability of the site to attract traffic from the web.

The other tool used now in determining the earning/cost per click is thru bidding. In this kind of the set-up the publisher may host a bidding activity participated in by advertisers interested on the ad spot of one publisher or website owner.

The cost per click in this way of online advertising depends on how much an advertiser is willing to pay for every click of his ad in a specific space in a website.