What Is PPC and How Pay Per Click Works?

What is PPC? And How does it work? You will get the answers to all your questions related to Paid Advertising.

In this article, I will tell you everything that you need to know about paid search marketing: ads, keywords, campaign, ad group, budget, targeting and lot more.

Now let’s start with the basics.

What Is PPC?

what is ppc

Pay-per-click (PPC) the name itself suggests that every time your ad is clicked you will need to pay the amount for each click to the host of that platform. One such platform is Google ads.

The objective of a PPC ad is to make the person viewing your ad to click on the advertiser’s landing page or website, where that user can take a valuable action, for example, buying a product.

Search engines are amazingly well-known advertising platforms. They enable you to show advertisements that are relevant to what customers are looking for.

Advertising platform such as Google ads and Bing ads operate with real-time bidding (RTB) system, here ads inventory is sold in a private auction which is automated using the real-time data.

How Paid Search Works

Each time there is an ad spot on a search engine results page (SERP), a quick auction happens for that keyword.

A blend of various components, including landing page, bid amount, quality of the ad choose the winner who will show up in the top spot of the SERP.

These auctions keep the wheels of PPC moving.

Auction begins at the time when someone is searching for a query on the search engine; if there are advertisers who are interested in showing ads that are related to the user’s search query, the auction gets triggered immediately for the keywords that are bid on by the advertisers. The ads that win in this auction their ad is shown up in the search engine results page.

To engage in these auctions, advertisers use platforms like Google Ads to set up their advertisements and figure out where and when they might want those ads to show up.

The campaign is the first part where we start, which is used for different types of management and reporting of various locations, product types and many more categories.

The campaign is then divided into ad groups which consist of keywords and the related ads.


Keywords are the most focused part of PPC, associating advertisers to customer’s search queries.

• Queries are the actual key phrase that users type in search engines so as to find results.

• On the other hand, Keywords are what we as an advertiser target these clients by matching their searches.

Keywords fill in as summed up deliberations of a wide scope of search questions, which are prone to irregularities like incorrect spellings.

Depending upon the keyword match type, the advertiser matches the search query with pretty much exactness.

In some cases, advertisers can decide to match keywords with exact search queries or even variations, for example, various orderings of the words, different spellings, or the consideration of different words.

It is advisable to have negative keywords, which will stop the ads from getting triggered for those keywords so that there is no irrelevant traffic.


Alongside keywords, you need to create an ad in your campaigns.

These are settled together inside the ad groups that target shared sets of keywords and are organized by common topics.

Ads are what the customers will see, so it’s very important to get right.

They normally contain a:

• Headline.

• Description.

• URL.

On the search engine result pages (SERP) they can appear on the top or at the bottom of the pages. It’s a very good practice to create different ad copy to test which one is performing best.

Platform like Google Ads and Bing Ads provide a feature known as ad extensions that give extra information of ad. Below are some of the examples of ad extensions:

• Sitelink is an extension which populates an ad by providing more links to different pages on a website.

• Call extension is an extension which adds a telephone number to the ad during business hours.

Ads extensions are extraordinary as they help in increasing the visibility of the ads by making them more informative and engaging to the users.

Setting up Budgets and Bids

So as to participate in the auction, advertisers need to choose the amount they’re willing to spend on a given keyword. Which is done using:

• Budget at the campaign level.

• Bids at the ad group level.

Budget is set at the campaign level and can exceed on a daily basis, but will not exceed on a monthly basis. Budget is set by planning overall account strategy; however, bids are more precise for controlling spending.

All the ads groups should have bids; however, keyword-level bids always override ad group level bids.

Because of the real-time bidding (RTB) system, the actual amount that the advertiser will need to pay is dependent on the competitor’s activity and ad rank, setting the maximum will not give you the rank.

Ad Rank

There is much more than just setting the maximum bid.

Search engine looks at different elements to figure out which ads should be at the top and most important spot on the search engine result page (SERP).

Different search engine has different factors by which they decide the ad rank. For example, Google considers the following factors to determine the ad rank.

• Bid amount

• Ad relevancy.

• Sometimes the ad extension whether the ad has the additional information or not.

Quality Score is a metric that decides ad relevancy. Below are the important components of Quality Score:

• Quality of the landing page.

• Historical CTR.

• Relevancy of the keyword and the ad.

Ad relevancy is very important; the higher your quality score is the lower your CPC will be.

Search engine doesn’t show the ads of the advertisers whose Quality Score is low, even though their bid amount is higher.

That is the reason it’s important to have an ad copy that is relevant to the keywords and landing page so that the ad is engaging to the users.

If your landing page is not relevant and engaging your ads will appear less in search engine result pages (SERP) due to bad user experience.

The site page must be relevant to the customers, load rapidly and overall provide a smooth user experience on all types of devices.

Right Targeting

Picking the correct keywords is the thing that enables advertisers to show the ad to the right people.

Be that are many other targeting options that should also be considered while optimizing your ad:

• Location.

• Demographics.

• Day and time.

• Device.

By using all these targeting options, you can decide whether your audience is using mobile or desktop in the evening or morning. What is the age of your target audience? And from which location are they operating, in order to optimize your ad for better performance.

These targetings are important on the grounds that various ad copy, for example, may perform better for one group of users than for another.

It is also possible by utilizing remarketing tools that allow more specific ad copy and adjust the budget accordingly, to target or exclude past users to a site who do follow up searches in the search engines.

You can adjust the bid automatically for different keywords dependent on your targeting options, giving your advertisers more control over traffic and spend by bidding when users are progressively important to the business.


The purpose of this difficult work isn’t to simply get clicks.

The genuine end game is to get conversions.

Conversions are the actions that advertisers need clients to finish after clicking on an advertisement and rely upon the type of business that is advertised.

Normal instances of transformations include:

• Buying something.

• Downloading a PDF or eBooks.

• Signing up for the Newsletters.

It’s essential to track conversions so as to know whether a PPC campaign is performing well or not and how many conversions we are actually getting through paid advertisements.

In a platform like Google Ads can track your conversions by a snippet code that is put into the source code of the conversion page to gather the number of conversions and data.

Conversion tracking is a tricky part because conversion path tends to be more confused than a simple click on an ad and an immediate buy.

They frequently include various searches and site visits or can prompt an email, telephone call or in-store visit.

Using Google Analytics tool can be helpful to decide how credit for conversions is given in conversion paths.