What is PPC (Pay-Per-Click) and how does it work?

what is PPC

PPC, which stands for Pay-Per-Click, is an advertising model that allows advertisers to display their adverts on the search engine results page (SERP), in return for a small fee every time the ad is clicked.

Let’s look at PPC advertising in more detail and understand how it works, the different types and some examples.

What we’ll cover in this post:

Table of Contents

What does PPC mean?

PPC is an acronym that stands for Pay-Per-Click. By referring to it in its full form allows us to understand it a lot easier.

As Pay-Per-Click means just that. Advertisers display their adverts online and pay a small fee each time it’s clicked, hence Pay-Per-Click.

What are the different types of PPC?

There are 4 main types of PPC advertising, all of which offer the advertiser something different. The skill comes from understanding each form and choosing the most relevant for your goals. They are:

  • Paid search marketing
  • Display advertising
  • Social media advertising
  • Retargeting PPC advertising
Paid Search Marketing

This is probably the most common type and is provided by companies such as Google Ads (Formally Google AdWords) and Bing Ads.

When users submit their search queries to these search engines, as well as relevant organic results being returned, the first 3 Ads that are shown to them, are Paid Ads.

These are the results of a Paid Search Marketing Campaign and in Google, are marked with a bolded ‘Ad‘ label to the left of the URL.

Paid Search Ads are marked with an ‘Ad’ label

Paid Search Ads can appear above or below search results on Google and are usually in batches of 3.

Display Advertising

This is connected to Paid Search Marketing as it’s available from the same providers. However, instead of a text-based advert, an image Ad or banner is placed on display networks such as YouTube.

These are great for increasing brand awareness, however, they generally result in a lower Click-Through Rate (CTR) when compared to Paid Search.

Display Ad being shown on the CNN Website
Social Media Advertising

Paid Social Ads are displayed on platforms such as Facebook and Instagram. They give you the opportunity to drive traffic to your website quickly and easily.

They are great for targeting a specific demographic and can be optimised to increase brand awareness, engagement and leads.

Retargeting PPC Advertising

Retargeting Advertising does just that. It uses cookies to retarget customers with Display Ads that are based on their previous online actions.

For example, if a user is shown a Paid Ad for your website and clicks on it, they will be directed to your website. If they then search for ‘Men’s Dress Shoes’ a Cookie will remember this action.

This means you know they are most likely male and looking for formal shoes. Knowing this you can retarget them with a specific Ad displaying the latest stock or offers for Men’s Formal Shoes.

As you already know the users intent and that they’re more likely to be at the stage of buying, this retargeting action results in an increase in conversion rate.

You can use Retargeting Ads in Search, Display and Social Media Advertising.

How Does Pay-Per-Click Work?

PPC works by search engines running an Ad Auction to determine which adverts are shown to the public and HOW they are positioned compared to others competing for the same search terms.

However, it’s Ad Rank that decides IF your Ad will be shown and in what exact position. Advertisers fulfill a set of criteria when building their Ads in order for them to gain a good Rank.

The criteria are made up of 6 factors:

  • The amount you are willing to Bid for your Ad to be shown (The highest Bid, doesn’t necessarily mean you will win the Ad Auction).
  • The quality and relevance of the Landing Page your Ad links to. The more relevant to your chosen search term the better.
  • Your Ad Rank must meet a minimum threshold in order for it to even be considered.
  • The chosen keyword will determine the competitiveness of an auction and how difficult it is to compete for.
  • The user’s search intent must match the keyword terms assigned to your Advert.
  • The Impact of Ad extensions
The Ad Rank criteria when building your Google Ad

By improving your Adverts rank, you can affect:

  • When your Ad is shown
  • How often it is shown
  • The cost of each click it attracts
  • The possible Conversion Rate

By taking all these factors into account when constructing your Ad, will give it the best chance to appear in the SERP.

What is PPC Bidding?

PPC Bidding is a term used to describe the handling of Keyword Bids within Google Ad Auctions, to determine which Adverts are displayed and in which order.

Advertisers bid on keywords to compete for their Ads to be displayed when a given search query is submitted to search engines. This is just one of the factors that determine when and where your Ad is shown.


PPC Advertising is a great way to quickly create brand awareness and drive traffic to your website. One of its main benefits is the ability to target your audience.

There is no quicker way to reach your target market online and is a SHORT-TERM way to increase traffic to your website.

An important point to note however is the reference to the short-term.

PPC Adverting does not and should not replace SEO.

Infact, you can find out why SEO is so important for small business right here!

Your organic SEO is the most important element of your digital strategy and provides the foundations of your visibility online. SEO is a long-term process that will keep giving results long after your PPC campaign has stopped.

However, running a PPC campaign alongside your SEO can be a winning combination and something we would encourage our clients to do if their budget allows.

Are you running a PPC campaign and not getting results? Or are you thinking about using PPC for your business and not sure where to start?

Our PPC Services ensure your budget is being used efficiently and effectively, maximising your results. We handle all management of your campaign and provide performance reports so you can understand what’s happening at all times.

Contact us today for a friendly chat or email us for more information. Why not take advantage of our FREE Website Audit to see how your website is currently functioning!

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Andy Johnson
Andy Johnson
I am an SEO Consultant with over 16 years of experience in the digital marketing industry. I achieved 'SEO Expert' status from the globally recognised Gotch SEO Academy and gained further accreditation from the UK Insitute for Data & Marketing in SEO and PCC marketing. My knowledge and passion for Search Engine Optimisation drive me to get results for my clients.