What is PPC? Pay-Per-Click Explained

Ryan MootHart, PPC Architect

Pay-per-click (PPC) marketing is a complex digital marketing channel. It presents a significant opportunity for digital marketers to grow their traffic and conversion metrics. But without a smart strategy and careful tactics, pay-per-click can cause major headaches.

We’ve put together the answers to some of the most common questions we get asked to better explain PPC marketing.

If you’re looking to skip ahead, here’s what we’ll cover on this page:

If you want to start from the top, let’s dive in!

PPC (Pay-Per-Click) Marketing Meaning

Pay-per-click marketing is an advertising channel where marketers generate ad impressions on a search engine, website, or social media platform and are charged on a per-click basis versus per impression. The bid amount may affect placement, but the advertiser only pays when their ad is clicked by an online user.

The most common pay-per-click ad format appears on search results pages of search engines like Google or Bing. Advertisers can place their brand, product, or service front and center in the form of an ad targeting a specific keyword or behavior.

Here’s an above-the-fold look at a recent Google results page for the query ‘personal loans.’

SERP for "personal loans," showcasing three sponsored ads

Everything outlined in red is an ad. Yep, it’s nearly everything you see on this search engine results page (SERP). And it’s not just text-based listings like this one above. Here is another above-the-fold look at a recent Google results page for ‘carry-on luggage.’

SERP for "carry-on luggage," showcasing sponsored produce listings

Those listings featuring the product picture, title, etc., are also all ads outlined in red.

There are other types of PPC ads that appear outside of SERPs as well. Let’s take a look at a more comprehensive overview below.

Types of PPC Ads

There are several different types of pay-per-click marketing ads. Like the examples above, some appear via a search network on a SERP (e.g., Google, Bing). Others appear outside of SERPs and contain different components. In essence, there are four main types of ads that can appear in various formats:

Text Ads

A text ad is composed of a written copy by the advertiser. Format and character limits depend on the PPC platform you are working on. Text ads are most commonly triggered through the Search Network – when users search on Google or Bing for a keyword held within your PPC campaign. Text ads can also appear outside of a SERP if they’re contained in a campaign that targets beyond the Search Network.

Product Listing Ads

A product listing ad is typically delivered after a searcher submits a query through a search engine or shopping engine. However, they can also appear outside of a SERP, be it in a display format on a website you’re visiting, in your email inbox, or even in a video you’re watching online.

These ads contain an image of the product, its price, and any pertinent specifications like size, color, dimensions, etc. All of these components derive from a product feed that is housed and regularly updated in a platform’s merchant account associated with a particular website domain.

SERP for "rain jacket men," showcasing sponsored product listing ads

Image Ads

An image ad is typically delivered in the format of an image or motion graphic. PPC platforms that offer display advertising often have size and content requirements advertisers must comply with when creating their visual creative.

Image ads typically show up and are available for advertising placement on websites across the internet and mobile apps. They can even appear in your personalized feeds and email inboxes. These ads may target you based on contextual signals or via remarketing (when an advertiser has a record of you visiting their site previously).

Example of a sponsored image ad

Video Ads

A video ad is, well, a video that often appears before, after, or even during another online video you’re watching on a platform such as YouTube or on an app (including on Smart TVs). Think of them as commercials. They can appear on webpages as well through a platform’s Display Network. Like image ads, video ads may target you via contextual signals or remarketing.

How PPC Works

PPC advertising works by using an auction system. Advertisers bid on signals (e.g., keywords, audience details) that are relevant to their business. When a user inputs a search term or is eligible to see an ad impression on a website or app, the search engine or website displays ads that are relevant to that search query or that user’s data profile. Ads are ranked and shown based on a combination of the bid amount set by the advertiser and the quality of the ad. The higher the bid and the better the ad quality, the higher the ad will be ranked.

PPC advertising is a productive way to reach a targeted audience. Advertisers can select or manipulate a number of different criteria to target their ads, such as keywords, geographic location, time of day, device type, audience demographics, and more. This allows advertisers to reach the right people at the right time with the right message in the right format.

Bidding can work in several different ways. Most platforms have various “smart bidding” options allowing the advertiser to set a target result they want any campaign to reach. For example, if you want a specific campaign to acquire as many sales as possible at a return on ad spend (ROAS) level of at least 200%, or 2-to-1, you can utilize a smart bidding option that allows you to target exactly that. Those results aren’t guaranteed, but the goal and target allow the platform’s bidding algorithms to place bids for you effectively.

Major PPC Advertising Platforms

Countless platforms offer text, display, and shopping PPC ad placement, but there are a few you cannot ignore:

Google Ads

Google Ads is Google’s primary PPC advertising platform and is, by far, the largest search engine in the market for most of the world. Google offers PPC text ads through its search network and various other formats (image, video, etc.) via their display and cross-network solutions, including ads on Google-owned mobile apps and video ads on YouTube.

Microsoft Advertising

Microsoft Advertising (formally Bing Ads) is Microsoft’s PPC advertising platform. While its share of the search market is dwarfed by Google, according to Impression Digital, Microsoft Advertising has doubled its share within the past 3-4 years. The platform allows pay-per-click advertising on its Search Network (Bing.com) and search partner sites (including Yahoo), along with native display advertising on Microsoft-owned web properties (such as MSN).

Amazon Advertising

Amazon is nearly 40% of the entire e-commerce market in the United States alone, according to Statista’s 2023 e-commerce report. Amazon Advertising is their solution that empowers advertisers to create display- and shopping-focused campaigns that promote their products on Amazon’s shopping network.

Social Media Advertising

Yes, social media platforms use PPC advertising as well. The exact format of ads, their capabilities, and their reach will depend on the platform being advertised on. The most prominent social media platforms with advertising options are:

  • Meta Ads – services Facebook, Facebook Messenger, Instagram, Threads, and WhatsApp.
  • LinkedIn Ads – services LinkedIn and specializes in business-to-business (B2B) PPC.
  • TikTok For Business – services TikTok with various video ad formats.

Benefits of PPC Advertising

There are four distinct benefits to PPC marketing:

  1. Speed – Set up and launch advertising campaigns quickly.
  2. Precision – Target the right users with the right message based on their intent.
  3. Agility – Test many different components in one ad unit and adjust budgets instantly.
  4. Measurement – See real results, including actual revenue generated from ads, almost instantaneously.

Pitfalls of PPC Advertising

While there are distinct advantages to PPC, the advertising model does come with potential pitfalls that advertisers should be aware of.

  1. Cost – PPC advertising can be expensive relative to other marketing channels.
  2. Waste – It’s easy to unintentionally spend money showing ads to users you don’t want.
  3. Volume – You are dependent on what users are actually searching for.

Things to Determine Before Launching a PPC Strategy

If you have a website, you must consider PPC advertising as a marketing channel. The key word is ‘consider’. Just because you have a website does not mean that you should engage in PPC. Before starting your first PPC marketing campaign, consider your advertising goals, overall marketing strategy, budget, competition, and risk tolerance.

Clear Advertising Goals

PPC advertising is most effective when you can match dollars spent to a conversion like a transaction or lead form completion. Clear conversion goals help you do that. Set a specific goal you want a set of campaigns or your entire account to achieve. For example: 

  • “I want as many leads as possible at a maximum of $100 average cost per lead” versus “I want as many leads as possible.”
  • “I want to maximize revenue with a minimum return on ad spend of 300%” versus “I want to maximize revenue.”

Overall Marketing Strategy

PPC is great for responsive, nimble advertising. Search ads, in particular, are great at targeting users with a high level of intent based on what they’re searching for. However, PPC ads should not be your only search marketing strategy. To get more users to eventually become your customers, you need to help usher these users on their journey through getting to know and understand your business.

This process cannot be achieved through PPC alone. While you can effectively advertise to users throughout the marketing funnel with PPC ads to assist them in their journey toward conversion, you need great content on your website and the ability for users to consume this content efficiently. That means you need to fully invest (time, energy, resources, and money) into the following service areas as well as PPC:

PPC Budget

How much do you have to spend on PPC ads? What’s possible in my respective search market? How much should I spend on bottom-funnel ads (users ready to convert) versus top-funnel ads (users still learning and researching)? All of these are questions you need to answer before you can estimate your PPC budget. Whatever answers you arrive at, you should have a solid number or range before you get started.


You are, with almost absolute certainty, not going to be the only business bidding on the keywords or users you want to target with your ads. You need to understand your market share versus your competitors, how much they seem to be investing in PPC advertising, and what messaging they’re using in their ads/on their site. Figuring out how much money you’ll need to spend to make real headway in your vertical’s search space, along with how you can best position your business to stand out, is vital.

Risk Tolerance

Not all of your PPC campaigns will target the same users, use the same messaging, and convert at the same rate (or even convert at all). So don’t go into this laser-focused on only creating campaigns that will convert users right away.

How much money are you willing to spend on “trying things out” and testing different ideas?  How much are you willing to invest at the top of the funnel so you eventually grow the volume of your sales or leads? Figure out the answers to these questions before you start spending money on ads.

PPC Ads for Each Conversion Funnel Stage

The type of PPC campaigns you create depends entirely on your marketing strategy and goals. It’s important to remember the conversion funnel when deciding the type of networks and ads you’ll show up on.

Marketing funnel

Display Ads for Top-of-Funnel Strategies

If want to drive awareness and interest, Image and video ads on display networks are a solid option. Display Network and display ad strategies are geared for advertisers who want to get in front of potential customers who are starting research, aren’t ready to buy, but may remember a brand for a later purchase.

Top of marketing funnel diagram

Display Network advertising typically offers lower average cost-per-click figures, allowing advertisers to get more impressions and clicks than the Search Network. However, display network traffic is typically lower in quality than from the Search Network when looking at the intent of those visitors. That’s simply due to the nature of these types of users.

Top-of-funnel display advertising allows for greater ad creativity while still being able to leverage specific user targeting parameters. Not only can you take advantage of user targeting options to help ensure your ads show to the right people, but you can also use image and video assets to capture a user’s attention. 

These creative options allow you to stand out from your competitors and convey a message effectively, creating new potential customers and growing the size of your sales funnel from the top down.

Search and Shopping Ads for Mid- and Low-Funnel Strategies

Potential customers are searching for your brand or the products and/or services you offer. They’re either aware of a problem and searching how to solve it, aware of a solution and searching for which businesses can help them, or aware of your brand and searching for you specifically. 

Middle of marketing funnel diagram

They are in the “desire” and “action” portions of the marketing funnel. Pay-per-click ads through the Search Network will help ensure you’re fully visible, front and center on a SERP when users submit these queries. 

Bottom of marketing funnel diagram

Search Network and Shopping traffic is typically more expensive than the display network, but searches are much further down the funnel— meaning they’re more likely to convert on what you’re offering. As a result, you’ll almost certainly see better conversion rates for these types of ads regarding transactions and lead submissions.

10 Tips to Optimize PPC Strategy and Campaign Management 

Creating and managing a full-fledged PPC strategy is no easy task. It requires constant analysis and routine optimization. If you’re looking to get started with your own PPC efforts, here are 10 tips to take into consideration:

  1. Reference Your Site to Set Up Campaigns: Use your site’s navigation and hierarchy to organize and differentiate your campaigns. If your company provides Services A, B, and C and you have separate pages on your site speaking to each of those services individually, then create one campaign for each.
  2. Separate Search from Display: Display campaigns are typically going to reach audiences of a different level of intent versus search campaigns. They’re different tactics for different purposes. As such, keep them separate. You’ll have much better control over your daily budgets and have a far easier time optimizing campaigns accordingly.
  3. Separate Brand, Non-Brand, and Competitor Terms: A user who searches for your brand, in particular, will have a greater chance of converting with you versus a user who is searching for something generic or a user searching for one of your competitor’s brands. You’ll want to consider bidding on all of these types of keywords for search network ads, but be sure to keep them separated into their own campaigns.
  4. Utilize Settings and Assets to Your Advantage: There are many campaign settings and ad assets available for you to use and adjust to your advantage. Ad scheduling, location targeting, sitelinks, and image extension are just a small handful to speak of.
  5. Understand Keyword Match Types: On the search network, you have the option of choosing different keyword match types. It is imperative you understand just how flexible each match type can be so you have clear expectations of what search queries may trigger an ad impression from one of your campaigns. Use these match types wisely!
  6. Reference On-Page Copy to Write Ad Copy: It’s one thing to write an ad appealing enough for a user to click through. You then want that user to stay on your landing page and engage with your content. To ensure users’ expectations are met once they click through, utilize language from your landing page for your ads and have clear calls to action.
  7. Link Your CRM to Your Advertising Platform: PPC platforms use advanced algorithms to try and target the right users. Having the most accurate conversion data is essential for this to work properly. For businesses that rely on lead generation, you’ll get the best results if your link your CRM directly with your platform and allow your final close-won lead data to be imported as a conversion. Feeding the platform that data on the final stage of the sales funnel will allow it to understand what types of users are actually becoming your customers and generating revenue for your business.
  8. Use Smart Bidding: Don’t try and pretend you can outsmart a multi-million dollar bidding algorithm. Use your platform’s smart bidding options to your advantage and get the best conversion-based results.
  9. Don’t Over-Optimize: Making an optimization based on quality analysis is essential. However, you don’t want to make too many changes in too short of time for any given campaign, as your platform needs time to learn to work with the optimization changes you’re making. A good rule of thumb is to give any change you make two weeks to work before you decide to make further changes.
  10. Continually Test New Ideas: Finally, never assume you have everything perfectly set, and stop optimizing entirely. Come up with hypotheses and test new ideas either in your advertising platform itself, on your landing pages, or the site’s conversion funnel, or a combination of these things. Your PPC strategy will never be perfect, but you can and should continually test new ideas to try and close your distance from perfect.

Learn More About PPC

Pay-per-click marketing is a complex digital marketing tactic. It can be a risky marketing channel if not managed properly. But it offers significant value, and it has to be a core building block for any successful digital marketing campaign. Know your goals, set your budget, and test carefully.

If you’d like to learn more, we constantly add PPC-focused content to the Portent blog. For a more thorough understanding of PPC, reference our six-part “Building Successful PPC” series: 

PART 1: Structuring Your Google Ads Account

PART 2: Understanding Campaign Settings

PART 3: Researching Keywords

PART 4: How to Create Effective Responsive Search Ads

PART 5: The Best Google Ads Extensions to Implement

PART 6: Tracking Success

Portent also offers PPC marketing services for companies big and small. If you’re interested in working with Portent or learning more about how we could work together, reach out!

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