How Does Pay-Per-Click Work?

How pay-per-click (PPC) advertising works, including keywords, ad types, and strategies for a successful campaign. Get expert help from Imbassy.

May 8, 2024
20 mins
Marketing
Table of Contents

As a smart business owner, you are always on the lookout for new opportunities to market your business and bring on board new customers.

In this highly competitive online world, pay-per-click advertisements are the perfect way to reach out to potential customers and promote your business.

If you want to learn about PPC campaigns and how they can benefit your business, Imbassy is here to explain what you need to know to improve your marketing efforts.

Imbassy has a team of experienced professionals who understand the ins and outs of PPC campaigns, including the best practices for optimizing your campaigns for maximum efficiency.

What is PPC (Pay-Per-Click)?

What is PPC (Pay-Per-Click)?

So, what’s PPC?

Pay-per-click (PPC) is an online advertising model that allows companies to pay for their ads each time a user clicks on them.

This type of marketing is based on keywords and search engine optimization, making it an effective way to reach potential customers who are looking for your products or services.

PPC campaigns involve bidding on keywords that you want to appear in the search engine results when someone types them in.

The more competitive the keyword is, the higher the price you will have to pay for each click. It's important to be strategic when choosing keywords and bids, as this will ultimately determine the success of your PPC campaign.

How Does Pay Per Click Work?

Pay-per-click (PPC) campaigns work by targeting users who are likely to be interested in your product or service.

For example, if you own a clothing store and have a PPC campaign running on Google Ads, you will be targeting users who are searching for clothing-related keywords.

When someone clicks on your ad, they will be directed to your website, and you will pay a certain amount for the click. The cost of each click depends on the keyword's competitiveness and how much you're willing to bid for it.

PPC involves several ad platforms but the most often used are Google Ads, Bing Ads, and Facebook Ads.

Each platform has its own set of rules and guidelines to follow when it comes to setting up campaigns, so make sure you read them carefully before launching your campaign.

The main formats are:

  • Display Ads
  • Search Ads
  • Shopping Ads
  • Gmail Ads
  • Video Ads

Because of the window to a large group of potential customers and several ways to set up and keep the campaign running, many brands kick off their PPC pay-per-click marketing campaigns on Google Ads.

Irrespective of the platform and ad format you choose, PPC runs in about the same way. Here is what the process involves:

  • Join the platform and set up an advertising account.
  • Construct persuasive ads (and optimize your targeting by adding relevant keywords to maximize the efficiency of your campaigns).
  • Determine the maximum cost you can comfortably pay for each click.
  • At this stage, your ad goes up for bid against other advertisers who are competing over the same keywords.
  • The auction system decides which ad will be displayed first and foremost.
  • You will need to pay a fee for every click your advertisement receives.

As you can see, it is a straightforward process that doesn't change much, irrespective of the platform you use to run your digital marketing PPC campaign.

Pay-Per-Click (PPC) Models

Pay-Per-Click (PPC) Models

The two main pay-per-click models are the flat-rate model and the bid-based model.

Flat-Rate Model

The flat-rate model is the simplest and most cost-effective type of pay-per-click service available. It requires you to pay a fixed price for each click your ad receives, regardless of how competitive the keyword is.

This makes it an ideal choice for small businesses with a limited budget who want to test out the waters before investing in a more expensive campaign.

However, since you won't be competing in the auction system, your ads will generally have lower visibility than those of bigger competitors who are using a bid-based model.

Bid-Based Model

The bid-based model allows you to compete in the auction system and determine how much you're willing to pay for each click.

In this model, the highest bidder will have their ad displayed prominently on the search engine results pages (SERPs).

To make sure your bid is competitive and that you're not overspending, it's important to do market research and understand what keywords are most relevant for your target audience. You should also be aware of current trends and competitors' bids to stay ahead of the game.

To maximize the efficiency of your payment-per-click campaigns, it is important to monitor their performance over time and adjust your budget or bid accordingly. As you experiment and become more familiar with PPC, you'll gain insight into what works best for your business and be able to maximize your returns on investment.

Now, let's take a look at how the auction works. This is where many PPC beginners struggle because of the complexity involved in it.

How Pay-Per-Click Ads Auctions Work

As soon as a user performs a search, there's an ad auction that decides factors like;

  • Is an ad account qualified for the auction?
  • How expensive a click will be for each of the advertisers whose advertisements are displayed?
  • The arrangement of ads on result pages, affects their visibility and reach.

There are several influencers involved in the process. The first is the maximum cost-per-click (CPC) that the advertiser locked into their PPC account for a particular keyword or ad group. This is the highest amount he is willing to pay for a click. Although it is not what he will pay.

The second factor is the search engine's Quality Score (QS). This metric is based on factors like; the relevance of ad copy and landing page, past performance, etc. The higher your QS score, the less you will have to pay for each click, as Google rewards advertisers who are actively engaged in optimizing their campaigns.

Finally, the placement of an ad on the displayed results is decided by the ad rank. Max CPC x Quality Score gives you the Ad Rank.

While Google's system involves the combination of many parameters to decide who will win the auction and get their ad displayed prominently on the SERP, the above formula is the basic structure of a PPC auction. The higher your Ad Rank, the better position your ad will be placed in and thus, it will have a greater chance of being seen by many people.

What Factors Decide How Much an Advertiser Pays For a Click?

While Ad Rank is the major deciding factor for the amount an advertiser will pay for a click, there are other influencers as well. To put it simply,

CPC = Ad Rank of the advertiser / Quality Score + $0.01

What Are The Benefits of PPC?

What Are The Benefits of PPC?

Are you wondering if PPC is the right choice for your business? Here are some of the benefits it offers.

You Have Total Control Over How Much You Pay And When The Ads Run

With PPC you can turn your ads on and off whenever you like. You can decide to run your campaign only when you need fresh leads or want to introduce a new product to the market.

You can also switch off your ads when your hands are full. However, to ensure you stand tall above your competition, you need to be continuously engaged in optimizing your campaigns.

You can also set up the maximum bid-per-click to ensure that your campaigns don't burn a hole in your pocket.

Click here to see a successful case study and learn about the journey and results we provided our client

You Can Start Getting Clicks in a Matter of Hours

After you create an account and run your ad, you should get approval within a few hours. After that, you will start seeing clicks almost immediately. You can even measure the performance of your ads on an hourly basis to ensure you get the best results for the amount you pay.

You only need to be qualified to be on the auction and to have a high enough bid.

This is why many marketers prefer PPC to other digital marketing channels like SEO. It gives them the freedom to control their budget while ensuring they get quick results.

You Can Target Your Audience Precisely

Unlike organic traffic, PPC gives you access to highly targeted audiences which translates into more clicks and conversions.

Pay-per-click marketing campaigns are excellent for small businesses as you can target customers who would best benefit from your services or products.

You can also tailor your ads based on geographical location and demographics. For example, if you are a local business that caters to a specific location, you can set your ads so they are only seen in that area.

This helps make sure that you don't spend money on clicks from people who wouldn't benefit from your services.

You can also tailor your bids according to the time of day and the device they are using. This ensures that you get the most out of your money and target the right people at the right time. To reap these benefits, you first need to know your clients and how they do their searches.

You Have Different Types of Ads to Choose From

Whether you own a small business or a big enterprise, with Google Adwords you have access to different types of ads, such as text ads, display ads, video ads, etc.

This helps ensure that your message reaches the right people at the right time in the most effective way possible.

You can use shopping ads to promote your eCommerce store or go after those who have abandoned baskets using remarketing ads. PPC gives you access to many types of ad formats. You need to take advantage of them to make sure that you get the best possible ROI from your PPC efforts.

PPC vs SEO

Brands often make the mistake of believing that PPC and SEO are the same or are competing against each other. However, the two marketing channels are different but complement each other. In both cases, your business needs to be on the pages of search engines.

SEO has to do with free clicks, while PPC involves paying for every click. While search engine optimization takes time to get results, PPC helps you generate leads almost immediately.

This is why many businesses employ both channels for maximum reach and growth of their business. PPC and SEO can be used together for maximum reach and long-term growth of a business.

What Are The Major PPC Marketing Platforms?

There are two major players in the PPC market and they are Google AdWords and Bing Ads. Both of these platforms have different tools, pricing, and features that you can use to create an effective marketing campaign.

Here is a brief look at each of them:

  • Google Ads (Previously known as Google AdWords)

Google AdWords is the most popular and widely used website PPC platform. It gives you access to a large number of keywords and various targeting options which you can use to create an effective campaign. It allows you to target users on search, display, and video networks like Google, Google Display Network (GDN), YouTube, and Gmail ads.

  • Microsoft Advertising (Bing Ads)

Bing Ads is the second biggest PPC platform with about 10% of the market share. It has many tools and features that you can use to target users in different countries and languages. Bing Ads also allows you to run campaigns on both Search and Display networks like Bing, Yahoo, and AOL.

The main difference between both platforms is the reach and market size. No matter which platform you choose, PPC can help grow your business. PPC can help businesses of all sizes grow in the digital space.

Whether you are a small business looking to target local customers or an enterprise looking to increase visibility and reach more people, PPC can get your message out quickly and effectively. All you need to do is choose the right platform and create a campaign that will attract and reach your target audience and high-paying customers.

There Are Other Ad Networks

The top two players in the PPC market are Google AdWords and Bing Ads, but there are other ad networks available. You may use any of them and still get great results.

Some of the other popular PPC networks include:

  • Amazon Ads
  • Facebook Ads
  • Twitter Ads
  • LinkedIn Ads
  • AdRecover
  • RevContent
  • AdRoll
  • AdBlade
  • Advertise.com
  • Bidvertiser

Although this article will focus mainly on PPC Google Ads and Bing Ads, it’s important to note that each PPC network has its own set of features and benefits that you should consider while making your decision.

The best way to maximize your ROI from PPC is by understanding the differences between the platforms, their strengths and weaknesses, and taking advantage of them to create an effective marketing strategy.

Take a look at this case study to see how maximum ROI was achieved with an SEO and PPC-optimized website.

No matter which platform you choose, PPC can be a great addition to any digital marketing strategy and help drive more sales for your business.

It’s an effective way to reach customers quickly and efficiently and should not be overlooked when creating a comprehensive marketing plan.

The Essentials of Search Ad Campaigns

The majority of businesses will only apply search and shopping ads when starting out with PPC in digital marketing campaigns. That is why we are going to look at the essential elements of search ad campaigns.

Campaigns And Ad Groups

In search ads, your account will be divided into campaigns and ad groups. You must have a good understanding of both before you start creating your campaigns.

  • Campaigns are the highest level of organization in a search account and they contain all your ad groups. The ad groups are made up of keywords and ads. You should create your campaign according to your set goals or your budget. To make it clearer, let’s look at an example. For a Agency that sells clothing, you may have one campaign for sweaters, another for t-shirts, and so on. Within each of these campaigns, you will have multiple ad groups related to the type of clothes you are selling. So within your sweater campaign, you could have an ad group for cashmere sweaters and another for wool sweaters.
  • Ad Groups contain specific keywords and associated ads that will be displayed when those keywords are searched for on Google or Bing. The kind of business you run and the number of keywords you bid on will determine the number of ad groups you have. You should also create separate ad groups for different types of keywords such as branded and non-branded, long-tail, and short-tail. It is important to keep your campaigns and ad groups organized to maximize performance. You make a bid that is used when an ad group's keywords cause it to show up. Some PPC experts use SKAGs (single keyword ad groups) for better control of what ads are shown and when.

Keywords

It is the keywords that you choose that will be used to trigger your ads. Before you select keywords, make sure you have done the necessary research and know what words or phrases people are searching for when they are looking for the products or services that your business provides.

Different match types should also be used to display ads more effectively depending on the search query. You can establish individualized maximum CPC bids for every keyword in an ad group, allowing you to customize your campaigns and maximize ROI.

Keyword Match Types

With keyword match types you can control which types of searches trigger your ads. There are four keyword match types used in search campaigns:

  • Broad Match
  • Modified Broad Match
  • Phrase Match
  • Exact Match

Broad Match: Broad match is the default match type option and uses a loose interpretation of keywords to trigger ads. This means that your ad could be triggered by any search query containing any of the words in your keyword, or even related words. Even misspellings and synonyms could be used.

Modified Broad Match: Modified broad match is slightly more restrictive than the regular broad match option and uses the ‘+’ symbol to designate certain words as required for triggering ads. For example, if you are bidding on ‘men's shoes’, your ad will only be triggered when someone searches for that phrase or a variation, such as ‘shoes for men’.

Phrase Match: Phrase match is more restrictive than broad and modified broad match and requires that the exact phrase is used for an ad to be triggered. For example, if you are bidding on ‘men's shoes’, your ad will not be triggered by the search query ‘shoes for men’.

Exact Match: Exact match is the most restrictive option and requires that an exact keyword phrase be used for an ad to be triggered. This means that if you are bidding on ‘men's shoes’, your ad will not be triggered by any variation of this phrase, such as ‘shoes for men’.

Negative Keywords

With negative keywords you are able to prevent certain terms from triggering your ads. For example, if you sell running shoes you can add ‘free’ as a negative keyword so that searches for ‘free running shoes’ will not trigger your ad. This is important for keeping costs down and ensuring that the right people are seeing your ads.

Ads

What is a PPC ad? Ads are what the searcher sees after you win a bid auction. They are the creative pieces of your PPC campaigns and should be written in a way that resonates with the target audience. They should also include key phrases or words from the associated keywords so that the search engine knows which ad to display based on the user’s query. Make sure to test different ads, incorporating different messages to see what works best for your campaigns. You can have several ads as part of an ad group. You can also decide how they are moved around. Your ads should show your USP and your message.

Bid Adjustments

You can make changes to your bids based on factors such as geography, device type, and time of day. For example, you can increase your bid for searches made in a specific geographic area, or decrease it if you don’t want to target that region. You can also adjust bids according to the device type; increasing bids for mobile devices if you want to target a mobile audience, or decreasing them if you don’t.

Location Targeting

As a part of your PPC campaigns, you can target specific locations; either by country, region, city, or even a particular area within a city. You’re able to do this with the help of location-targeting options. This allows you to target the right audiences and increase ROI. You can also target multiple locations at once in an ad group. This means you can pick a city, or region, or target a radius within a specified area to reach the right people. Location targeting is particularly beneficial to local businesses.

Ad Schedule

If your data shows that your ad is more successful at certain times of the day, you can choose to set up an ad schedule. This way, you can control when and where your ads appear. You may want to focus on peak periods or even limit it to specific days to get maximum ROI from your campaigns. Some marketers switch off their ads at night while others are happy to leave them running 24/7. It all depends on your budget and goals.

Budget

When running PPC campaigns, it is important to have an effective budget. You should decide on a daily budget and stick to it. This will ensure that you are not overspending and wasting your budget on ineffective ads. It is also important to track the performance of your ads so that you can optimize them accordingly. While Google ads never overshoot your monthly budget, it is important to keep an eye on your daily spending. It is normal for Google to overshoot your daily budget due to the auction model, but the monthly budget should remain intact. Here's what the tech giant says:

“Up to 2 times your campaign's average daily budget can be used to show your ads on certain days of the week or certain times of the month based on fluctuations in traffic — but not more than you spend on your campaigns each month. If your average daily budget is US$10, up to US$20 can be used to show your ads on certain days based on fluctuations in traffic.”

Ad Extensions

Ad extensions are additional pieces of information that appear alongside your ads in the search engine results pages (SERPs). They can enhance the visibility of your ad and make it stand out from the competition. Ad extensions allow you to include more information about your product or services and give users a better idea of what you offer. There are several types of ad extensions available, from site links to callouts and more. It's important to keep testing different ad extensions to see which ones work best for your campaigns. When a user clicks on an ad extension, you pay the same amount as you do for a click on the major ad.

The Essentials of Shopping Ad Campaigns

Do you own an eCommerce store? Your preferred PPC ad format should be shopping ads. They are a great way to get more clicks, leads, and customers. Shopping ad campaigns let you place your products on the SERPs where the images and prices are made visible to all.

These ad campaigns have similar components to search ad campaigns. But there are a few key differences that you need to keep in mind. The main difference is that you cannot choose your keywords. You can only pick negative keywords. Shopping ads use product data to determine the best match for your ad. So your product name, description, and landing page copy are of utmost importance.

Google Merchant Center

A Google Merchant Center account lets you upload your product data to the tech giant's search engine to generate shopping ads. It also lets you track your performance, as well as set up automated rules and manage different campaigns. This is where you will find all of the necessary information about your products, including prices, images, availability, and shipping details.

To run a shopping campaign, you have to manually upload your product data to the Merchant Center. You can also do this using a product feed from your website.

Product Feeds

Product feeds are a great way to optimize your shopping campaigns. They are essentially an organized list of product information that can be imported into the Merchant Center. The feed includes all of the necessary details about each product, such as its name, price, availability, and images. This makes it easier for Google to match relevant queries with your ads. You should ensure that your product feed is always up-to-date and accurate, as any discrepancies can lead to your ads not being seen.

More About Shopping Ads

When you add shopping campaigns to your PPC plan for your eCommerce store, you will be able to take advantage of several features to achieve your goals. Some of these features include product ratings, which can help boost your click-through rate; geographic targeting, which allows you to tailor your ads based on where the users are located; and retargeting, which helps reconnect with people who have already visited your website. You need to master them so that you can get the most out of your shopping ad campaigns.

Other Bidding Strategies

Some platforms have moved slightly away from the traditional definition of PPC. With your goals and preferred ad format in mind, you are able to include any of these strategies as part of your pay-per-click campaign.

  • Target return on ad spend (ROAS)
  • Target cost per action (CPA)
  • Maximize Clicks
  • Maximize Conversion Value
  • Maximize Conversions
  • Enhanced cost per click (ECPC)

When you adopt these strategies, you don't set up a maximum CPC. Instead, Google Ads or another platform will automatically adjust your bids and charge you based on a target ROAS, based on an action, based on a specific goal, or geared toward receiving the highest number of clicks for your budget.

Keyword Research And Competitor Analysis

To ensure the success of your PPC campaigns, you need to do proper keyword research and competitor analysis. This will help you identify the keywords that are most relevant to your business, as well as those used by your competitors. It's important to note that this is an ongoing process, so make sure to check in on it from time to time.

You also need to know how much your competitors are paying for their keywords, so you can set your bids accordingly. This will give you an idea of the bidding landscape and help you decide if a particular keyword is worth pursuing or not.

Final Thoughts

PPC digital marketing campaigns are an essential tool for any business that wants to get more visibility and leads from the search engine results pages (SERPs). From shopping ads to other bidding strategies, there are multiple ways to reach your target audience and drive conversions. It's all about understanding how pay-per-click works and leveraging it to your advantage. With the right strategy, research, and monitoring, you can make sure that your PPC campaigns are successful.

Get The Most Out of Your PPC Campaigns With Expert Help From Imbassy

At Imbassy, our team of experts can help you create and manage your PPC campaigns so that you get the best results. We specialize in performance-driven PPC services, so we will work with you to find the right approach for your business. Contact Us today at [phone] for more information about how we can help make your pay-per-click campaigns successful.

Frequently Asked Questions (FAQs)

What is Pay Per Click (PPC)?

Pay-Per-Click or PPC is a form of online advertising in which advertisers pay a fee each time one of their ads is clicked. It is also known as the cost-per-click (CPC) model. PPC services are mostly provided by search engines like Google, Bing, and Yahoo.

What Does PPC Stand For?

PPC stands for Pay-Per-Click, which is a form of digital advertising where advertisers pay each time an ad is clicked.

How Does PPC Work?

Pay-per-click works by creating an ad campaign that targets specific keywords. When users search for those keywords, your ad will be displayed in the search engine results pages (SERPs). You are only charged when someone clicks on your ad.

What are Shopping Ads?

Shopping ads are a type of PPC ad that displays products from an online store. These ads usually appear on search engine results pages when someone is searching for a product or related terms. They allow customers to quickly compare prices and learn more about the product before clicking through to the store’s website.

What Are Search Ads?

Search ads are a type of PPC ad that is displayed on search engine results pages when someone searches for keywords related to your business. These ads typically include a headline, description, and image to help draw users’ attention and encourage them to click through.

How Do I Make My PPC Campaign Successful?

Success with pay-per-click campaigns requires proper keyword research, competitor analysis, and an understanding of different bidding strategies. You should also monitor your campaign regularly to make sure that you are getting the best results possible. It’s also a good idea to get help from an experienced PPC agency like Imbassy which can ensure that your pay-per-click advertisement is successful.

How Much Does Pay-Per-Click Cost?

The cost of pay-per-click campaigns depends on the bids you make for each keyword. The more competitive the keyword, the higher you will have to bid to get your ad displayed. However, if you use a smart bidding strategy and target the right keywords, you can maximize your budget and get great results.

Yasser Aly
Founder & CEO

Yasser Aly is the driving force behind Imbassy. With a passion for revolutionizing digital experiences. With a profound understanding of technology and business, he spearheads Imbassy's mission to empower brands through innovative solutions. Yasser's expertise and dedication drive Imbassy's commitment to excellence, shaping the future of digital marketing and customer engagement.

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