What is pay per click and how does it work

What exactly is PPC?

Has it ever crossed your mind what that advert is that appears alongside your search results on Google? Well, that is PPC or pay-per-click. The advert is tailored to your search result. So, if you were to search for a car, then you are more than likely to see an advert for a car appear after you hit that return button. But how does PPC work and does it benefit your business?

pay per click SEO keyboard button

What is PPC?

Pay-per-click advertising is a type of advertising model that works like this, every time a user clicks on a PPC advert, the advertiser pays for it. It’s as simple as that. So, PPC is buying visits to your website rather than relying on organic visits.

The different types of pay-per-click advert

  • Paid search
  • Display advertising
  • Remarketing

The most commonly used PPC ad is the paid search advert. These are the adverts linked to a search term typed into a search engine. So as we said, when you type in a search term into a search engine like Google, these ads will appear. When the search term is commercial or the search is for something to buy, the advert will reflect the search. This kind of search will trigger the PPC ad.

A pay-per-click advertisement is when a business running the advert pay when the user clicks on their ad. Pay-per-click.

How does a pay-per-click advert work?

The simple answer is an auction. Anyone wanting a pay-per-click advert cannot simply pay more for the advert to appear higher than a competitor but must enter an auction. This auction that the search engines use is an automated process. The auction decides the relevance and the validity of the advert that appears on their search engine results page (SERPS).

Keywords and their importance in pay per click advertising

Keywords are part of the ad auction. A keyword is a term that advertisers will place a bid on. The keyword will trigger when a search term with the keyword is searched.

The types of keyword

  • Exact – Where the query must be as it is typed
  • Exact (Close variant) – Query can be exact and can include misspellings and variations
  • Phrase – Must be typed exactly and can include incorrect order of words
  • Phrase (Close variant) – Must be typed exactly and in the correct order of words but can include misspellings and variations
  • Broad – Search typed in any order and can show ads for similar searches
  • Modified Broad – Search typed in any order, must include terms that contain a plus sign
  • Broad (Session-based) – A broad match is for previously searched terms – those ads that appear when you searched the same or similar term before.


  • Search network – This is the most widely used targeting. This is more keyword-based advertising which means that the ads will appear related to the search query typed in. The search network includes Google partners such as AOL and Amazon
  • The display network – Are a multitude of sites that show Google text, images and video. A user may visit a site that is relevant to their search without necessarily purchasing anything.
  • Search network with display opt-in – This combines both the search network and the display network. You can create a campaign on the Search Network and also opt-in to have Display Network.
  • Shopping: Product listing ads – Shopping campaigns do not rely on keywording. Search engines determine the match on search results to relevant products

Pay-per-click terminology

Search engine marketing (SEM)

The sole purpose of digital marketing is to rank as high as you can for a targeted keyword. SEM relates to any form of digital marketing carried out using a search engine such as Google. SEM relates to both paid and unpaid forms of advertising in regards to ranking for keywording.

Cost-per-click (CPC)

Cost-per-click (CPC) refers to the amount that is paid every time someone clicks on your advert. Always set your CPC at the highest price you will pay for a click on your advert. Calculated by your competitor’s ad rank and your quality score.

Ad ranking

A value that determines where your advert will be on the page. This is equal to your maximum bid multiplied by your quality score. The score that a search engine gives your page is based on your click-through rate or CTR against the average CTR of adverts in the same position on the page. Keyword relevance, the quality of your landing page and past performance are also taken into account.

Your maximum bid

How much do you want to pay? You can set your maximum bid in two ways. Firstly, manually where you, yourself decide on the maximum amount you will pay. Secondly, enhanced which the search engine determines based on the information you have given.

Your CPM (Cost per Mille)

More commonly known as cost per thousand, is basically the cost per a thousand impressions. This is used mainly for paid social and display averts.

The campaign

When setting up a PPC campaign is to determine the message you want to get across. and the assets needed for your ad.

Ad group

An ad group is a series of ads. These ads are based on your campaign and related keywords. You can set up separate CPCs for each ad set.

Keywords on the advert

When you create your ad and ad group, they will target keywords or key terms that you have stipulated. The keywords are for the search engines to determine which search queries your advert will appear against. In time you will find out which keywords work best for you and will be able to set up a CPC for that ad set that you know work well.

The text on your advert

When writing the text for your advert, this should include your keywording as your quality score is based on how relevant your ad is in search.

The landing page (Where your advert takes the user)

The landing page is the most important part of the whole PPC process. This is where your users first arrive when clicking on your ad. So make sure the page is SEO friendly, attractive and easy to navigate otherwise your bounce rate will be high.