Pay-per-click (PPC) advertising is a digital marketing model where advertisers pay a fee each time someone clicks their ad. Rather than earning visits organically through SEO, PPC lets you buy visits to your website. When executed well, the revenue generated from those clicks far exceeds the cost.
How PPC Marketing Works
The basic concept is straightforward: you bid on keywords relevant to your business. When someone searches for those keywords, your ad may appear. If they click, you pay the bid amount (or sometimes less). If they don't click, you pay nothing.
The Auction System
PPC platforms use auction systems to determine which ads appear and in what order. When a user searches, an instant auction occurs among all advertisers bidding on relevant keywords. Winners get ad placements, but it's not simply highest-bidder-wins.
Google Ads, the largest PPC platform, considers:
- Bid amount: What you're willing to pay per click
- Quality Score: Google's rating of your ad relevance and landing page quality
- Expected click-through rate: How likely users are to click
- Ad relevance: How closely your ad matches search intent
- Landing page experience: Quality and relevance of your destination page
This means well-crafted, relevant ads can win positions even with lower bids than competitors.
Types of Paid Advertising on Google
Search Ads
Text ads appearing above and below organic search results. Users searching have active intent—they're looking for something specific. This makes search ads highly effective for capturing ready-to-act audiences.
Display Ads
Visual ads appearing across Google's network of partner websites. Good for brand awareness and reaching audiences based on interests or past browsing behavior, even when they're not actively searching.
Shopping Ads
Product listings showing images, prices, and store information directly in search results. Essential for e-commerce businesses selling physical products.
Video Ads
Ads appearing on YouTube before, during, or alongside videos. Effective for brand storytelling and reaching engaged audiences consuming video content.
App Ads
Promote mobile app installations across Google's networks, including Search, Play Store, YouTube, and Display.
Key PPC Metrics
Understanding these metrics helps you evaluate and optimize campaigns:
Click-Through Rate (CTR): Percentage of impressions resulting in clicks. Higher CTR indicates relevant, compelling ads. Average search CTR is 3-5%.
Cost Per Click (CPC): What you pay for each click. Varies dramatically by industry—legal keywords can exceed $100; others cost under $1.
Conversion Rate: Percentage of clicks resulting in desired actions (purchases, sign-ups, calls). Typical conversion rates range from 2-5%.
Cost Per Acquisition (CPA): Total cost to acquire one customer. Calculated as total spend divided by conversions.
Return on Ad Spend (ROAS): Revenue generated per dollar spent on ads. A ROAS of 4:1 means $4 revenue for every $1 spent.
Quality Score: Google's 1-10 rating of your keywords, ads, and landing pages. Higher scores reduce costs and improve positions.
PPC Examples in Practice
Example 1: Local Service Business
A plumbing company bids on "emergency plumber" in their city. When someone searches at 2 AM with a burst pipe, their ad appears first. The click costs $45, but the average repair job is $350. Even converting just 10% of clicks, the math works.
Example 2: E-Commerce Product
An online retailer runs Shopping ads for running shoes. Product images, prices, and ratings appear directly in search results. A $2 click leads to a $120 purchase 3% of the time—$66 in revenue per $100 spent on average.
Example 3: B2B Software
A SaaS company bids on "project management software for agencies." Clicks cost $35, but a single converted customer pays $500/month. One conversion every 20 clicks ($700 cost) yields $6,000 annual value.
Building a PPC Campaign
1. Define Your Goals
What do you want visitors to do? Buy products, fill out forms, call your business, download resources? Clear goals shape everything else.
2. Research Keywords
Identify search terms your target customers use. Tools like Google Keyword Planner show search volume, competition, and estimated costs. Start with high-intent keywords directly related to your offering.
3. Structure Your Account
Organize campaigns by product/service categories, then ad groups by specific keyword themes. Good structure enables relevant ads and efficient optimization.
4. Write Compelling Ads
Create ads that match search intent, highlight benefits, and include clear calls to action. Test multiple versions to find what resonates.
5. Build Landing Pages
Don't send clicks to your homepage. Create dedicated landing pages matching ad messaging, focused on a single conversion action.
6. Set Budgets and Bids
Start with budgets you're comfortable potentially losing while learning. Use automated bidding strategies or manual bids based on your cost-per-acquisition targets.
7. Launch and Monitor
Launch campaigns, monitor performance closely, and resist making changes too quickly. Let data accumulate before optimizing.
8. Optimize Continuously
Add negative keywords to block irrelevant searches. Pause underperforming keywords. Improve ads and landing pages. Scale what works.
Common PPC Mistakes
Sending traffic to homepage: Generic homepages don't convert. Build dedicated landing pages.
Ignoring negative keywords: Without negatives, you'll pay for irrelevant clicks. Regularly review search terms and block what doesn't fit.
Too broad matching: Broad match keywords trigger unrelated searches. Start with phrase or exact match for control.
Not tracking conversions: Without conversion tracking, you can't measure what matters. Set this up before launching.
Set and forget: PPC requires ongoing attention. Competitors adjust, search behavior changes, and performance drifts without optimization.
Is PPC Right for Your Business?
PPC makes sense when:
- You have budget for ongoing ad spend
- Your margins support customer acquisition costs
- You need traffic quickly (product launches, seasonal business)
- You can track conversions accurately
- Competition or time constraints limit organic options
PPC may not fit when:
- Margins are too thin to cover acquisition costs
- You can't commit to ongoing budget
- Your market isn't searching (awareness stage products)
- You lack resources to manage campaigns properly
Getting Started
Begin with a focused approach: one campaign, targeting your highest-value keywords, with dedicated landing pages. Set a budget you're comfortable learning with. Monitor closely, optimize based on data, and expand as you see what works.
PPC offers powerful, scalable access to customers actively searching for what you offer. The learning curve is real, but the potential returns—immediate traffic, measurable results, controllable costs—make it a cornerstone of many successful marketing strategies.