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The Development of the Pay-Per-Click Advertising Model

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As the web became more commercialized, various forms of advertising were developed. One of the first was the “banner ad,” which was clearly visible and easily understood.

It was often presented as being just like a billboard, but with the added advantage of people across the globe being able to view it.

Another form of advertising was “hay per click.” At its most basic level, this involved the placement of a small ad on a search engine, for which you were charged only if a visitor clicked on it.

Since 1997, pay-per-click (PPC) advertising has become the fastest-growing method of online marketing.

As its popularity increased, the model was altered somewhat to take advantage of technological advancements and to deliver what research said potential clients were looking for in an online ad.

During the last decade, PPC advertising has become the most popular method of running ad campaigns online amid generally believed to be the best advertising method, as far as return on investment (ROI) is concerned.

The following timeline highlights the development of the PPC advertising model over the last several years and the search engines that offer it as an option:


Bill Gross, Founder of 1dealab, developed a concept for a search engine that focused solely on search. 

He named the engine “GoTo.com” to brand the site as the place millions of Internet users could “go to” in order to find what they were looking for.  This search engine was renamed Overture late in 2000


The GoTo/Overture website launched, with a search-only focus. The pay-per-click model was introduced, which enabled businesses to bid on search terms in an auction format.

The amount bid for the terms determined their ranking in the search results-the highest bidder appeared first in the list, the lowest bidder last.


GoTo/Overture launched a Pay For Performance. Affiliate Program that allowed businesses to add a search box to their websites and, in return, receive payments based on the number of visitors who conducted a GoTo/Overture search from their site.

The ePilot paid-search engine, and pay-per-click technology aimed at driving consumer traffic to this flew Search engine, was introduced.

Search 123.com was founded in June.

The FindWhat.com network was launched in September.

Kent Keating founded Kanoodle.com in October.

Enhance Interactive was founded under file name ah-ha.com.


Google became the largest search engine on the web, with a new index comprised of 1 billion URLs. Yahoo! selected Google as its default search results provider to complement the Yahoo! web directory and navigational guide.

ePilot 2.0, with new design and advanced search features, including a keyword-bidding wizard, was released.

The BrainFox network was founded in June.

PageSeeker/ROAR began operation in September.

Search123.com launched a pay-per-click search engine platform in October, with a robust self-service user interface for advertisers and a real-time reporting interface for traffic partners.

The Searchfeed.com network was established in November.

FindWhat went public and began trading on NASDAQ.

GoTo officially began to change its corporate name to Overture.


Google advertising programs attracted more than 350 premium Sponsorship advertisers and thousands of AdWords advertisers, and delivered clickthrough rates four to five times higher than clickthrough rates for traditional banner ads.

Yahoo! launched “Sponsor Matches” with Overture as its Pay-For-Performance search provider.

Another major upgrade of the ePilot search engine was announced. The move enabled the company to partner with other search engines and distribute tens of thousands of sponsored advertiser listings.


Google launched AdWords SelectTM, an updated version of the AdWords self-service advertising system with a number of new enhancements, including cost-per-click (CPC)-based pricing.

MSN signed an agreement with Overture to be its Pay-For-Performance search provider for MSN Search in the
UK, and
Canada through 2003. Yahoo! extended its Pay-For-Performance search partnership with Overture for three years.

Interchange unveiled an industry-leading Keyword Suggestion Tool, which helped advertisers pre-populate a robust and comprehensive keyword list utilizing a unique comparative research process.


Google surpassed 100,000 active advertisers in its Google AdWords program.

Google AdSense, designed to maximize the revenue potential of a website by serving highly relevant ads specific to the content of the paper, launched. Initial partners included ABC.com.

HowStuffWorks Internet Broadcasting Systems, Inc., Lycos Europe, Knight Ridder Digital,About.com, CNET, and others.

Google introduced enhancements to its AdWords service, including a conversion tracking tool and expanded match technology.

In June, Search 123.com was acquired by ValueClick, Inc.

In July, Yahoo! and Overture signed a definitive agreement for Yahoo! to acquire Overture. In October, Overture stockholders voted in favor of the company’s acquisition.

ePilot’s search distribution network exceeded I billion searches in the third quarter of the year.

The search engine began development of their Local Direct search and advertising platform and pioneered Keyword DNATM“-a search technology that mapped billions of keywords directly to over 10 Million individual
U.S. business listings.

This effectively bridged the gap between category-based directory lookup and unstructured keyword search.

A merger between FindWhat.com and Espotting, a major European search engine, was announced.


Google announced a new web-based mail service called Gmail. Gmail included relevant advertising delivered with the same technology that scanned web pages as part of the AdSense service.

The AdWords program itself was enhanced with the addition of local search targeting capability, enabling advertisers to specify a geographic range for delivery of their ads.

Overture launched Local Match-their local search solution, with options that allowed it to attract businesses with no online presence.

Interchange launched the breakthrough Local DirectTM search and advertising platform. The platform integrated a “push to talk” service, which combined the power of inbound telephone leads from the web with the flexibility of a pay-her-call model.

Also partnered with YellowPages.com to provide local paid search, which enabled YellowPages.com to offer cost-per-click advertising services to its advertisers via Interchange’s Local DirectTM search and advertising platform.


Overture was renamed to Yahoo! Search Marketing Solutions.

Google launched a limited beta test that will let advertisers choose the sites on which their contextually targeted ads appear.

But they have to pay for those ads on a CPM (cost per 1,000 impressions) basis.

Keywords: Pay-Per-Click, PPC, banner ad, billboard, hay per click, cost-per-click, CPC, ppc history.


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