Skip to content

How Does PPC Work? – An Introduction to Pay Per Click and Google Search Ads

Facebook Quiz: Why is PPC advertising like Ebay? Find the answer here!

PPC, Google Ads, Keywords, Quality Score. Have you wondered how these terms fit together and how PPC works? This article will introduce the underlying principles of PPC and explain some of its terminology.

A number of platforms offer PPC advertising. Here, we are going to talk about Google, since it is undoubtedly the most used search platform, accounting for 86% of all Internet searches in September 2021.

What is PPC?

PPC stands for Pay Per Click. It is a model of advertising where the advertiser pays nothing for an advert to be displayed, but instead pays when someone clicks on the advert to view the linked page or website.

Search Ads, the Most-used Type of PPC Advertising

Google offers several types of PPC advertising including text-based Search Ads, image-based Display Ads, Video Ads(usually up to 15 seconds, displayed on YouTube) and Google Shopping Ads.

From now on, we will focus on Search Ads, as they are the first choice of many businesses. Here’s a simple example of how they work:

An Internet user searches for “Hairdresser Bristol”. Google displays the results on the Search Engine Results Page (SERP) in a list, headed by several listings marked Sponsored (replacing the previous black Ad label). Because of their prominent position, the searcher’s attention is drawn to the “Sponsored” listings. She clicks on them to get more information on the linked websites. On one of the websites she sees what she is looking for and makes a booking.

The listings marked Sponsored are Google Search Ads. Although they look very similar to the listings that appear below them they are fundamentally different. The lower, “organic” search results have gained their position in the listings via SEO – which can be regarded as a measure of a good website. By contrast, the “Sponsored” listings have been created by businesses who are willing to pay to get a higher search results ranking than they would otherwise achieve. With a Google Search Ad, they can sidestep or supplement SEO to gain visibility that will bring visitors to their website. In the example above, by attracting the user’s attention and generating a website visit and booking, a Google Search Ad has done its job.

The most successful Search Ads appear at the top of the first page of Google Search Results, where they are most likely to be seen and to attract clicks from users.

Search Ad Format

Similar to organic search listings, Google Search Ads display a website URL, a title (website meta-title) and a section of descriptive text (website meta-description).

Although at first glance, there is little visual difference from an organic listing, ad-extensions allow a variety of additional information to be presented in an ad. This can include practical information such as location or phone number, links to other website pages, and key messages (callouts), for example “5 star reviewed” or “immediate bookings available”. A “structured snippet” extension can be used to briefly highlight key aspects of a product or service. For instance, in our hairdressing example, “brazilian straightening” might be used by a hairdresser to differentiate his salon from others who do not offer this treatment.

Well-designed Search Ads have several important features:

  • They are search-generated. Search adverts appear only on the search results page and only in direct response to a user search. Unlike other types of advert, they do not appear spontaneously on web pages that users visit.
  • They are relevant. In this example hairdressing adverts were displayed because the user searched for “Hairdresser”. If the person had searched for trousers, they would have seen adverts relating to trousers or clothing.
  • They target particular consumers. When the advert is created, a target audience is specified using characteristics such as age, gender, location, and interests. The advert will be displayed only when the searcher meets those criteria.
  • They appear before other search results. Their position high on the Search Engine Results Page makes them more likely to catch the eye of the searcher and attract a click.
  • Their purpose is to bring the searcher to a relevant page on a website. Once there, the searcher can find out more about the product and may become a customer.

Measuring Ad Performance – CTR

A key measure of the success of a Search Ad is its Click-Through Rate (CTR). This is the number of clicks the ad generates compared to the number of times it is shown i.e. if an ad is displayed 100 times and gets 5 clicks, its CTR is 5%.

Average CTR varies a lot by industry. For some industries it is likely to be a low single-digit percentage. However, it is important to remember that the percentage is calculated from many thousands of views. Also, that without Google Search Ads, a website listing might rank so low that it is hardly seen at all.

Paying For a PPC Ad – CPC

Google Search Ads are billed on the basis of Cost Per Click (CPC). That is, each time someone clicks on an ad, the advertiser incurs a charge. If no-one clicks on the ad there are no charges.

This sounds very simple at first. But CPC is more complicated than it sounds. It is not a standard charge. It can vary from a few pence to many pounds.

Various factors affect a Search Ad’s CPC. An important one is the Ad’s Quality Score. Another is the keywords it uses.

Keywords – The Cornerstone of PPC Advertising

When creating a Search Ad, advertisers specify a list of keywords. These are words they consider likely to be used in a search for their product or service. Their ad will be displayed when their ad’s keywords match a user’s search terms. In the example above the keywords might have been hairdresser, haircut, or hair straightening.

The choice of keywords affects an ad’s CPC because other businesses may wish to use the same keywords. Each business will “bid” on the keywords with the maximum amount they are willing to pay per click. Generally, the higher the bid, the higher the chance of achieving a top search results ranking, so if a keyword is in high demand, its CPC is likely to be high. If an advertiser’s bid is too low, their ad might still be displayed, but rank so low that it is unlikely to be seen.

Quality Score

When an ad is created, Google will give it a Quality Score. This is Google’s rating of the overall user experience that the ad and landing page will provide. A higher Quality Score is liable to result in a lower CPC. It will also influence the ad’s eventual ranking on the Search Results Page.

Components of Quality Score

Quality Score is calculated using factors including:

 expected clickthrough rate. This is how likely Google considers the chosen keywords to generate a click on an ad. It is based on the performance of similar ads in the past. It also takes into account how closely the keywords match the search terms people use when looking for a similar product or service.

ad relevance. This measure compares how well the keywords match the ad’s content. The more closely related the words, the better. An ad which mentions hairdressing, but goes on to talk about nail art would be likely to receive a low score for ad relevance, for example.

landing page experience – This score relates to what the user experience will be after they have clicked on the ad. Google takes into account the relevance of content on the linked page, how long users stay on it, whether they click on other links and whether they eventually make a purchase.

The better the ad performs against these measures, the higher the Quality Score and, potentially, the lower the CPC it will incur.

Perhaps unsurprisingly, when it comes to CPC Google also tends to favour businesses who advertise consistently and with a steady spend. Thus, in the longer term, a lower-spend continuous campaign may work better than stop-start high budget campaigns.

Why Should You Use PPC?

PPC Search Ads require careful setup. But there are a number of compelling reasons that you should consider using them, including:

  • Search Ads Get Results Fast. It takes skill, time and effort to build a web site which ranks highly due to its SEO alone. PPC Search Ads could make your listing outrank web sites with even the best SEO in a matter of hours.
  • Search Ads Are Cost Effective. You only pay the CPC charge when someone clicks on your ad to visit your web site. Shoppers who are not interested will simply move on, costing you nothing. So, you are not paying for the ad to be seen, only for visits to your web site by potential customers.
  • Search Ads Focus On Your Target Audience. Unlike older forms of advertising, which use a “scattergun” approach (posters, hoardings, TV and radio, for instance), PPC allows you to select who will see your ad. By targeting users based on factors including interests, age, gender, language and geographical location, you can pre-select people who are likely to be interested in your product. That will maximise the chance that they will click to visit your website, and perhaps become a customer.
  • Search Ads Allow You To Re-target Previous Web Site Visitors. The majority of web site visits do not result in sales. Most people move on without making a purchase. Perhaps they wish to do more research or maybe they are browsing for a future purchase. They might simply be undecided about your offering at the time of their first visit. By re-targeting them, you can remind them of their interest in your product and bring them back to the website to reconsider a purchase.
  • Search Ad Performance Is Highly Measurable. PPC allows you to monitor how your ads are performing. You can see how many clicks they are generating and how many of these convert to sales, and adjust them if they are not working for you. If you are running multiple ads, you can see which are successful and which are not.


PPC advertising is not a replacement for SEO. Instead, it should be used to support and supplement it. These two ways of gaining visibility for your website work differently, and you could think of them as the tortoise and the hare. While PPC Search Ads are an instant boost, getting you visibility quickly but temporarily, the slow-burn effect of SEO will produce a longer lasting effect, by raising your organic ranking, ongoing. In the long term, the second of these is what you need. Recent research shows that Click Through Rate is higher for the top organic search results than for even the highest ranking Search Ads.

While you are waiting for your SEO to take effect, however, PPC Search Ads could give your business the foot-up it needs, putting your product in front of the right people at the right time. It is also perfect for getting the news out about sales, discounts and special promotions.

We hope that you have found this article useful. If you liked it, please feel free to share it.