What Is Pay Per Click? Basics of PPC Marketing Explained

Businesses will spend over $190 billion on pay per click (PPC) advertising in 2024 alone. Furthermore, 65% of small to mid-sized brands are running PPC campaigns.

But if you’re part of the 35% that’s not running PPC ads, you may not be familiar with PPC and how it works.

Fortunately, you’ve come to the right place. I’ll explain everything you need to know about PPC marketing so you can implement this strategy with confidence without blowing your budget.

What is Pay Per Click (PPC)?

Pay per click (PPC) is a digital advertising model where publishers get paid each time an ad gets clicked on (hence the name).

PPC ads come in all different shapes and sizes. But the one we see most often is facilitated through search engines. When you Google certain terms, you’ll see ads appearing at the top of the organic results. But we also see PPC ads run on social media platforms and through display ads directly on websites.

How Pay Per Click (PPC) Works

Most PPC campaigns are focused on keywords. Advertisers can bid on certain keywords, and then appear in the SERPs as a sponsored link based on their budget. The more competitive the keyword, the higher the cost of the PPC ad.

There are also flat-rate PPC campaigns, where the price per click is fixed. This is more common when PPC ads are run directly on websites and blogs.

Regardless of the model, the advertiser pays a fee each time their ad gets clicked by a user.

Common Types of Pay Per Click (PPC) Ads (With Examples)

To help you further understand how PPC works, let’s look at some common types of PPC ads that we see across the web on a daily basis.

Search Ads

If someone clicks on any of these sponsored results, Google receives a commission (and it’s a hefty one for such a competitive search term).

Display Ads

Display ads appear in other areas of the web, and they’re commonly facilitated through an advertising network. In the example above from Forbes, they’re actually running this display ad twice—first as a banner and then again within the scroll.

Shopping Ads

Similar to search ads, shopping ads appear in the SERPs above the organic results. But they’re specific to products based on the user’s buying intent.

Social Ads

Most social ads today mirror the same look and feel is an organic post, but they have a “sponsored” tag. They blend seamlessly within a user’s feed, so they’re not intrusive to their browsing experience.

Alternatives to PPC Advertising

Pay per click is just one type of paid advertising model. Other common options include:

• Cost per mile (CPM): Advertisers pay based on every 1,000 ad impressions (no clicks necessary)
• Cost per action (CPA): The user needs to complete a specific actions beyond clicking, like downloading or installing
• Cost per lead (CPL): Commissions are paid only when a user turns into a lead, often by filling out a form

PPC tends to be the most popular, but you can experiment with different pricing models depending on your goals, budget, and ad type.

PPC vs. CPC

PPC and CPC are commonly used interchangeably, but they’re not quite the same thing.

Pay per click refers more to the general paid advertising strategy in which dollars are exchanged for clicks. Cost per click (CPC) is a financial metric that advertisers use to track how much they’re spending on PPC ads.

PPC vs. SEO

Unlike PPC, search engine optimization (SEO) is purely about generating organic traffic without paying for clicks. While you might still be paying to implement general SEO tactics, you’re not paying for the traffic itself.

Generally speaking, PPC ads tend to generate immediate results. If you run an ad today, you can generate revenue tomorrow. SEO is a long-term play. Publishing a single blog today or making your website faster now won’t get you thousands of new visitors instantly. But over time, it can be highly profitable as you won’t have to rely on paying for clicks to get traffic.

I have a complete guide that breaks down and compares PPC vs. SEO so you can figure out which method works best for your website.

PPC vs. SEM

SEM is an acronym for search engine marketing, which is a broad topic that includes PPC.

In addition to PPC, other types of search engine marketing include SEO, local SEO, technical SEO, keyword research, remarking, blogging, and more.

Final Thoughts

It’s a good idea for most businesses today to experiment with PPC ads. Just make sure you tread cautiously at the beginning, as you could easily blow through your advertising dollars without getting the results you need.

We offer paid search services here at McDougall Interactive, so we can get you set up and manage campaigns on your behalf. Book a free consultation for more information.