Glossary: Pay-per-click (PPC)

In short: Pay-per-click (PPC) in marketing is an advertising model where businesses pay each time their ad is clicked. This method helps target interested consumers and drive quick conversions, though the cost of high-demand keywords can significantly increase ad spend. Google Ads is a well-known example of PPC advertising

Pay-per-click (PPC) definition

PPC advertising is an online advertising model where you pay a predetermined amount of money each time someone clicks on your ad. It's largely considered a bottom-of-the-funnel (BoFu) strategy that targets consumers familiar with a brand and its products.

PPC advertising was once the domain of search engines. PPC ads appear at the top of a search engine results page, making it easier for paid search to stand out from organic search results that rely on search engine optimization (SEO).

Today, PPC advertising includes much more than Google Ads and Bing Ads. Your modern PPC campaign might include:

• Video ads (such as YouTube ads)
• Social media ads (such as Meta ads and LinkedIn ads)
• On-site ads that lead visitors from one website to your landing page

It's important to remember that PPC advertising has its pros and cons.

On the plus side, PPC on Google Ads and similar platforms can reach a broad audience of people who've expressed interest in your products or services. PPC campaigns also work much faster than most digital marketing strategies. While it can take weeks or months for SEO to move your link to the top of search engine results pages, PPC ads can complete this task immediately.

The potential downside is that you must bid on relevant keywords, which can get quite expensive. Once you finish your keyword research, expect to pay top dollar for the most popular keywords. You could see your ad spend increase dramatically.

Then again, you might not mind paying a high pay-per-click amount as long as your ads convert visitors into paying customers.

What is pay-per-click (PPC)?

Let's take a closer look at pay-per-click advertising to better understand how it works.

Pay-per-click example

A business that offers motor oil changes wants to use search engine marketing to reach consumers who have shown interest in vehicle maintenance. Since the business wants to target potential customers within its geographic area, it chooses "oil change near me" as its keyword.

With this goal in mind, the company opens a Google Ads account and begins a search campaign. According to Google's keyword ad auction, the business will pay $1 each time someone clicks the PPC ad. It chooses to use search ads because it wants search engines to put its link at the top of their results. The business starts its new online advertising campaign and prepares to measure the results.

Over the next month, the business uses Google Analytics to track performance. After 30 days, 500 people have clicked the ad copy and visited the oil change landing page. The business offered a 10% discount to customers who used a phrase included on relevant landing pages, so it can also track how many conversions it got from the PPC advertisement. According to the data, 100 people used the discount.

From this information, the business knows:

• It will pay Google Ads $500 (a $1 cost per click for 500 clicks).
• It converted 20% of people who clicked the PPC ad.

This looks promising to the business, so it expands its PPC marketing efforts from the search campaign to include:

• Banner ads through the Google Display Network (GDN)
• Video ads on YouTube
• In-feed ads on Facebook and TikTok

Knowing that the advertiser pays for each click, the business will set a maximum bid for each campaign. That way, it can reach people through more platforms while protecting itself from high pay-per-click marketing costs.

Common practices for PPC ads

Some common practices marketers use with pay-per-click ads include:

• Organizing similar messages and themes into ad groups to make campaign management easier.

• Considering the target audience's needs and conducting keyword research that addresses pain points.

• Matching the PPC ad's keyword with content on your landing pages (otherwise, people might feel misled and will navigate away from your site).

• Establishing advertising budgets early and setting limits to avoid overspending.

• Using them in conjunction with content marketing to create a full-funnel campaign and improve organic ranking on search results pages.

• Storing PPC data from Google Ads and other platforms in a central location for more.accurate campaign comparisons

Pay-per-click (PPC) terms to know

• Ad group: A collection of ads that share a theme, keyword, message, or other asset.

• Ad rank: A PPC advertisement's position on a search engine results page (SERP).

• Keywords: Popular phrases consumers might use in search engines to find products or services that meet their needs.

• Landing page: A destination page intended to convert visitors into customers.

• Maximum bid: The highest amount you're willing to pay for a keyword.

• Quality score: A search engine score based on factors like click-through rate (CTR) and keyword relevance.