The age-old challenge of paid advertising is getting people to pay attention, which, of course, is no easy task. Pay-per-click (PPC) marketing, developed in the 1990s, changed this for the online world. Even if advertisers still can’t compel consumers to read or watch their ads, they don’t have to pay when people ignore them.
Learn more about how PPC marketing works, its potential benefits, and popular platforms to help you reach your target audience.
What is PPC?
PPC refers to pay-per-click advertising, or an advertising model in which web advertisers only pay when users click on their ad. If someone views the ad and doesn’t click, the advertiser isn’t charged.
The PPC advertising model is used on a wide variety of digital marketing platforms, including Google Ads, Microsoft Ads (commonly known as Bing Ads), and Meta Ads. It is most commonly associated with Google Ads, which popularized PPC with the launch of its self-service ad platform in the early 2000s.
PPC vs. SEM: What’s the difference?
Although PPC is a model of pricing for advertising, not an advertising strategy, the term is often used synonymously with online performance advertising as a whole. Search engine marketing (SEM) is a type of online advertising that may itself be considered PPC. SEM includes paid ads that display throughout search engine results pages, designed to be relevant to the user’s search query. SEM is different from search engine optimization (SEO), which involves creating website content that is designed to rank on search engine results pages organically.
How does PPC marketing work?
In PPC advertising, advertisers only pay when a visitor clicks on their ad. The price they pay per click (referred to by advertisers as their CPC, or cost per click), is determined by an auction model. Every time an ad is shown, the price if a user clicks it is determined by three factors:
1. The advertisers’ bidding strategy. Advertisers set what they are willing to pay per click or action on the platform. This can be done directly, referred to as cost-per-click or CPC bidding, or CPA (cost-per-action) through a set of algorithmically informed rules.
2. Competition from other advertisers. The number of other advertisers looking to advertise on the same advertising slot, as well as their willingness to pay, will drive the price of the ad’s click up or down.
3. The platform’s perceived relevance of the ad. PPC platforms, such as Google and Microsoft, will programmatically assess how relevant an ad is to the viewer, based on past data. Each platform has its own assessment of relevance. In Google Ads, it is known as Quality Score and is assessed based on the ad copy and landing page experience that the ad links to. More relevant ads are effectively given a discount on their price per click, whereas less relevant ads have to pay more for the same click.
Each advertising platform has its own proprietary weighting of these three factors. Google’s weighting system is known as Ad Rank. But these principles are the same on all platforms.
Benefits of PPC
PPC advertising contributes to nuanced, effective marketing in a few ways:
Targeted reach
The starting point of PPC ads is defining your target. PPC advertising platforms aid audience targeting in a few ways. The most common are keyword search targeting, behavior-based targeting, and interest-based targeting. In a PPC advertising platform, these can be segmented further as targeting subsets, called ad groups or ad sets.
Dynamic pricing
PPC campaigns almost never have a single price per click for an entire campaign. Instead, part of the benefit of PPC campaigns is their ability to programmatically select different bids per click for different audiences. Advertisers are often willing to pay more for clicks that are more likely to convert.
For example, a jeans brand would likely pay more to advertise on the search “buy skinny jeans online” than they would the more generic, lower intent search “jeans.”
Cost caps
In a PPC model, advertisers are able to put ceilings on their willingness to pay to show an ad. These ceilings can be applied to CPC bids, or in advanced campaigns, ceilings on price per conversion (referred to as target cost per acquisition, or CPA). Both let advertisers control their ad spend, assuring them that costs stay within what they’re willing to pay for a click or conversion.
Segmented analysis
A PPC campaign’s ability to segment doesn’t just apply to targeting; advertisers can also segment their reporting to better understand performance. For example, an advertiser might segment its conversions report into mobile versus desktop to see the difference in conversion rate. If it finds the conversion rate is higher on desktop, it may opt to bid more on future desktop-based ads.
PPC platforms
PPC ads can appear in a variety of ad formats, depending on the advertiser's ad platform, settings, and ability to generate dynamic ads.
Google Ads
Google Ads doesn’t only refer to Google search ads. It refers to the complete network of advertising placements that you can reach through the Google Ads interface, including Google search, Google Display Network, Google Shopping, and YouTube Ads. All of these platforms offer PPC bidding. They require a Google Ads account to access them.
Bing Ads
Bing Ads is run by Microsoft Advertising. It runs ads on the Bing search engine. Its functionality is very similar to Google search ads, and it is designed so that marketers can quickly import and mirror their Google campaigns in Bing.
LinkedIn Ads
LinkedIn Ads is owned by Microsoft but not connected to Microsoft Advertising. It allows PPC advertising on the LinkedIn social network, with a focus on lead generation.
Meta Ads
Meta’s advertising platform, which includes ads on Facebook and Instagram, offers a wide range of advertising methods, including PPC.
PPC ad types
PPC ads can take a variety of ad formats, depending on the advertiser’s ad platform, settings, and ability to generate dynamic ads:
Static text
Static text ads are the standard format of the paid search ads you’ll find at the top of search engines like Google or Bing. Static ads may have many different variants of text, but the text is always pre-written by the advertiser rather than dynamically generated.
Dynamic text
Dynamic text ads show in the same places as static ads, but instead of showing pre-written copy, the ads are dynamically generated based on who searched for what. For example, an ecommerce store may have a countdown to when their Black Friday Sale ends. It can set up its ad to dynamically update based on the day.
Static media
Static media ads are the standard format for ads on social networks or display ads. They show images or videos that the advertiser uploads to the ad platform. Depending on the ad’s placement, the media may take a different size or be accompanied by text.
Dynamic media
Dynamic media ads show in the same places as static media but are informed by data about the person seeing the ad. This is the most personalized type of advertising. For example, an apparel company could set its dynamic ads to show someone the exact version and size of a shirt that the person previously viewed on its website.
PPC marketing FAQ
Are PPC and CPC the same?
No, PPC and CPC are not the same, but they are related concepts. PPC refers to digital advertising that is based on pay-per-click bidding. In a PPC campaign, the actual results of what an advertiser pays per click is referred to as their cost per click (CPC).
What is PPC management?
PPC management is the practice of actively optimizing PPC campaigns. This can take the form of changing bids, updating target audiences, keyword research, or many other ad account management practices.
Is PPC only used with Google Ads?
No. Google Ads popularized PPC advertising, but it originally started through display advertising sites in the late 1990s. Today, many digital advertising platforms offer PPC ads, including Bing, Meta, and LinkedIn.
What does PPC mean in marketing?
In marketing, PPC refers to pay-per-click, the model of digital advertising in which an advertiser only pays for an ad when a viewer clicks it.
