ppc advertising cover

What Is Pay Per Click Advertising? Understanding The Basics

May 21st, 2020

If you’re new to the world of paid advertising then it can seem very daunting at first. With so many techniques, strategies and jargon to learn, knowing where to start can be difficult. From not knowing what keywords to target or how to write ads, many people give up at the first hurdle.

But little do they know that they’re missing out on one of the most powerful online advertising strategies out there.

When learning about paid search it’s important that you always get the basics covered first. There’s no point learning about quality score if you’ve never made a campaign before. And there’s certainly no point learning about paid search strategies if you’re a complete newbie.

Before you venture into the advanced topics of PPC it makes perfect sense to tackle the basics and lay the foundations on which you can build upon.

To bring you up to speed with PPC advertising, we’ve put together a helpful guide to give you a solid idea of how the whole thing works. No matter if you’re a business owner looking to increase your sales, or if you’re just starting the journey of becoming a paid search specialist, learning the basics is essential.

To get things started we’re taking a look at what PPC advertising means, and it’s definition. From there we’ll dive deeper into the advertising model and how the pieces fit together, including the most popular networks and the benefits of using them.

So grab a pen or open up OneNote and prepare yourself for an educational ride into the world of paid search marketing.

What Is PPC Advertising?

The first thing we should get out of the way is what PPC actually stands for. If you managed to get this far without stumbling across its full name then that’s pretty impressive.

If you haven’t managed to work it out by now, then you should know that PPC stands for pay-per-click. It’s not exactly a secret and doesn’t mean anything different, it’s just obviously a lot quicker to say (and type) PPC instead of pay-per-click.

As you can probably make out from the name, it implies that someone pays for every click that they receive. With that being said, PPC also has plenty of other names that are often used interchangeably when talking about pay-per-click ads. Here are some other names for PPC advertising:

  • PPC marketing
  • Paid search marketing
  • Search engine marketing
  • Search advertising

Now you have a good understanding of PPC terminology, now is a good time to take a look at the PPC definition.

What Is The Definition Of PPC?

Pay-per-click can simply be defined as:

An online advertising model used to direct traffic to websites in which advertisers pay a publisher whenever their ad is clicked.

The important thing to note here is that there is an advertiser (the business who has a product or website to be promoted) and a publisher (the person or network which displays the ad on their site).

Once the publisher puts the advert on their website and they start receiving clicks, the advertiser will be charged for every click they receive. The price they pay per individual click can depend on a range of factors including the popularity of the keyword and certain metrics such as the quality score. Since the PPC model uses a bidding system like eBay, whoever pays the most, usually gets the best spot and most clicks.

Let’s take a closer look at why advertisers would want to use this model over cost per thousand impressions models, and why publishers would sell their advertising space at all.

How Does PPC Advertising Work?

The pay-per-click advertising model has been around since the early 90’s and has been continually tweaked by various businesses for over 20 years. From looking at the history of PPC, many businesses tried different variations of the model to see what worked and what advertisers liked.

The early versions of the model saw huge backlash from advertisers who didn’t particularly want to pay for every click and preferred to pay a fixed fee every month instead.

However, once advertisers actually gave the model a go they were very impressed by the amount and quality of the traffic it provided. Unlike traditional marketing methods at the time, pay-per-click marketing allowed advertisers to focus their marketing efforts on specific users who were searching for certain keywords. Since PPC marketing is commonly found on search engines, if someone is searching for insurance then displaying ads about insurance to them is a great idea.

Nowadays there are several variations of the pay-per-click advertising model with most of them being used on social networks and search engines. If you’ve ever typed a keyword into Google and seen ads like this:

ppc car insurance example

Then you’ve probably experienced and even interacted with Google’s paid search advertising service.

Every ad you see in this picture is being paid for by a company (known as the advertiser). The publisher who displays the ads, which in this case is Google, receives money from advertisers every time a user clicks their ad.

From looking at data from Google’s own Keyword Planner tool, the average advertiser pays $5.16 per click on the keyword “car insurance”, with the highest cost per click being $12.30. Considering the keyword receives over 358,000 clicks a month, over $1,800,000 is being spent every month by advertisers on this keyword alone. When you think about how many other keywords there are out there, that’s a lot of money!

Google Pay-Per-Click Advertising

Although there are plenty of different paid search networks out there, the biggest one by far is definitely Google Ads. Also referred to as Google Ads, Google’s paid search network was launched in 2000 just a few years after the search engine itself.

It might not have been the first PPC network to hit the market, but since its release, it’s grown to be the most popular and dominant by far. If a business is serious about search engine marketing then there’s a really high chance they’ll be using Google Ads.

As of June 2020, Google makes 97% of its total revenue from selling advertising space through its paid search service. Considering Google had a total revenue of $134 billion in 2019, that’s a lot of money from paid search advertising!

However, just because it’s the most popular doesn’t mean that it’s the only one out there. In fact, there are plenty of other networks which can also provide impressive results for advertisers. Sometimes other networks are even more cost-effective as advertisers don’t have anywhere near the amount of competition from other users.

Other PPC Networks

Some other popular PPC networks include the likes of Bing Ads which is run by Microsoft and Facebook Ads which are run by the world’s biggest social media network.

Facebook Ads are an interesting network as they don’t revolve around a search engine. Instead, they work a little differently when targeting users.

facebook ppc example

In this example, the adverts are displayed to users based on information collected about the individual’s profile. This includes things such as the pages they have liked, the pages they have visited and other things listed on their profiles such as age, gender and location. Unlike search engines that only focus on keyword searches and the intent of the user’s search, Facebook ads target a whole demographic category instead.

This has both its pros and cons which can be great for some advertisers, but nowhere near as effective as Google Ads for others.

It’s also important to understand that advertisers use paid search marketing for different reasons. Not everyone is just trying to increase their number of sales. Here are some of the top reasons advertisers are PPC marketing instead of other online advertising strategies.

The Role of PPC Marketing

The role of PPC in search engine marketing is not just limited to increasing sales, although that’s what many businesses do use it for. With paid search marketing, it allows advertisers to employ a range of different internet marketing strategies, depending on the network they are using.

Increase Brand Awareness

brand awareness

No matter if you’re a small organization or large multinational corporation, making sure people recognize your brand is crucial. If you show anyone the Pepsi or Coca-Cola logo then they’ll instantly be able to tell you the brand even though they both sell very similar products. What’s more amazing is that although 99% of the world already recognizes these brands they still spend millions on marketing every single year.

With PPC marketing, brands can get lots of exposure when people search for keywords related to their brand and the products they sell.

In the example above, the watchmaker BERING is running PPC ads on the keyword “watches”. Every time someone searches for watches the first thing they’ll see is the advert from the company which reinforces their brand name and makes users aware of their products.

When it comes to increasing your brand awareness and exposure, getting your brand to appear in search results for relevant terms is a great way to achieve this.

Generate More Conversions

generate more conversions

One of the most important roles of PPC marketing is driving more leads and sales. If companies are spending thousands of dollars a month on internet marketing, then they should expect to make a return on their investment. The only way to do this is by generating more sales and leads from their PPC marketing.

With access to millions of searches from millions of users every single month, PPC marketing is an excellent way for companies to boost their sales with little effort. Compared to other search engine marketing strategies such as SEO, the results are almost instantaneous once set up.

If you have the money to invest in PPC marketing then there’s a good chance you’ll make a healthy return on ad spend with the right management.

Retarget Users

retarget users

Considering how popular and effective online advertising is, many advertisers are also using it to ensure they get the most out of their advertising budget. One of the most unique strategies of search advertising is that it allows advertisers to retarget users who have previously visited their website.

Whether they initially visited their website via internet marketing or not, many PPC networks such as Facebook and Google allow advertisers to set up retargeting campaigns. This means that advertisers can run specific display campaigns which are aimed at getting these visitors back to their site.

Compared to regular search campaigns, these retargeting (also known as remarketing) campaigns are much cheaper per click. A click on the keyword “car insurance” might cost an advertiser $5 per click, but with remarketing campaigns, these clicks are significantly lower.

If they already invested a lot of money to get a user on their website but they didn’t buy anything, then it’s much cheaper to retarget the same user than new users. This strategy of retargeting users makes PPC marketing an essential part of any advertiser’s search engine marketing strategy.

Expand Your PPC Knowledge

Just getting started in pay-per-click marketing? We’ve got all the guides you need to dominate your industry. No matter if you’ve never done search engine marketing before or are still using cost per thousand impressions advertising, we’ve got plenty of articles that will help take your knowledge to the next level.

Read some of our most popular PPC articles below.

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