What is Pay-Per-Click (PPC) advertising?

Pay-Per-Click (PPC) advertising is an online marketing model where advertisers pay a publisher each time their ad is clicked on.

It is used to drive traffic to websites and is a targeted form of purchasing site visits. Each time an ad is clicked and leads the visitor to a specific website, the advertiser gets charged a small fee. 74 percent of brands report that this method is a significant growth driver for their business.

The website visit ideally leads to conversion (whether this comes in the form of making a purchase, signing up to a newsletter, booking a phone call, or other action). PPC is generally used to reach new audiences, boost sales, generate leads, and increase brand awareness. In the UK, it accounts for 51 percent of the digital ad spend in the country. 

The PPC model is mainly offered by search engines like Google and Microsoft Bing and social networks like Facebook and Twitter. Google Ads and Facebook Ads are popular examples of PPC advertising. 

How is PPC used?

PPC ads can come in the form of display ads, search ads, and remarketing and can appear on websites, social media networks, and mobile apps. Typically, they are relevant to the content around them – for example, ads on Twitter have similar formats to organic posts but are labeled as ‘promoted’ or ‘sponsored’. 

Generally, the PPC model is beneficial because it is based on keywords, which boosts the promise of relevance on both sides of the marketing equation. 

Advertisers find potential new customers who are looking specifically for products or services related to the keywords they are typing into search engines, and customers discover new products or services that they might previously have not known about.

How does PPC work?

PPC is also incredibly measurable and trackable, offering valuable data around campaign performance, including impressions, clicks, conversions, traffic volume, and customers’ behavior and search patterns. This means that it is easy to set up campaigns with budget flexibility, allowing advertisers to expand only the campaigns that are generating positive results. 

PPC advertising rates are set either through the flat-rate or bid-based models. In the flat-rate model, which is often used by content sites, the advertiser pays a publisher a set fee for each click. 

In the bid-based model, the advertiser bids on an advertising spot, and the publisher uses automated tools to auction off that spot. The winner of the auction is usually set by real-time data around the relevance and quality of the content ranking instead of relying solely on the amount of money offered.   

Search engines have their unique methods of determining ad rank. For example, Google, which offers the largest PPC platform (Google Ads), looks beyond the bid amount to consider other elements. These include the context of the search (such as time of day when the customer is searching) and the Quality Score, a metric that measures ad relevance. 

The Quality Score looks at the historical click-through rate (CTR), the keyword’s relevance to the ad, and the quality of the website that the visitor is being led to. The website needs to be relevant to the user, with a fast loading speed and smooth overall experience in order to rank highly.