PPC: What It Means & Why It Matters


Have you ever noticed the adverts that appear alongside your search results on Google and other major search engines? Then you’ve already got an idea of what pay-per-click (PPC) advertising is. While there are different types of PPC ads, the most common one is a Google search ad.  Google search ads appear as you enter in your search query on Google, and are triggered based on the keywords you searched for. This can be anything from looking up what kind of eatery is near you, looking for a barber or even searching for a place that sells antique furniture. All of these kinds of searches trigger pay-per-click ads in a search engine. 

But why is it called pay-per-click? The answer is simple: businesses who choose to run pay-per-click ads are only charged when someone actually clicks into their ad. Besides paid search ads, display advertising and remarketing are all types of PPC advertising.

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How does it work?

Let’s take Google Ads as an example of PPC advertising. 

When running a Google Ad, you’ll set yourself a budget for how much money you want to spend on that particular campaign. Each ad campaign targets a specific set of keywords that relate to your business. When these keywords are searched for in a query by a user, your ad will appear at the top of the SERP (Search engine results page). Being at the top, it naturally becomes more visible and gathers far more impressions than most content competing to rank organically. If a user clicks, you will be charged a sum of money – this sum is called the actual cost-per-click (actual CPC). How is this calculated? And why is it called the ‘actual’ CPC?

To put it simply, there are two types of CPC – actual and maximum. The maximum CPC is the upper limit that you can set within your campaign structure for how much you will pay for a click. Should the CPC rise above this threshold, your ad won’t show but you won’t be charged. The actual CPC is the amount you actually pay, which will in most cases be less than the maximum CPC. 

CPC is calculated based on a bidding system. Each ad has its own specific AdRank number, which is based off a number of factors including:

  • Quality score
    • Ad relevance
    • Expected click-through-rate
    • Landing page experience
  • Historic ad performance
  • Competitiveness 

With this information, each ad is assigned an AdRank number. Those with the highest numbers will appear at the top of SERPs. Each advert will pay just enough to ‘beat’ the ad below it. This way, it becomes easy to understand how a competitive keyword with lots of ads can suddenly get expensive CPC’s – it’s entirely dependent on how much you and your competitors want to spend. 

Once your budget dries up or you end the campaign, your ad will stop running and won’t show up anymore in SERPs.

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Why does it matter for your digital marketing campaign?

The underlying goal of all PPC ad campaigns is to make more money from the adverts than you spent on them. What this means is that if you spent HKD10,000 on 1000 clicks, you would hope to make over HKD10,000 from conversions. 

Understanding how PPC ads work and are charged is key to optimizing your ads and getting the most for your money. At the end of the day, the goal of all digital marketing campaigns is to promote your business in some way or another, whether it be to drive brand awareness, increase traffic to your website, close conversions – or all three.

The relationship between PPC and SEO

PPC and SEO complement each other in a variety of ways. On the most basic level, this is because PPC campaigns offer short-term but immediate results. You can think of PPC ads as turning on the lights for your business: it happens instantly and people will see what your brand offers – but you’ll have to pay your electricity bill if you want to hold their attention. SEO, on the other hand, offers results after a number of months. The upside of SEO is that it offers a steady source of organic traffic that you won’t have to pay for. 

PPC and SEO campaigns overlap in the sense that they can be targeting similar keywords. PPC campaigns can identify certain keywords which have the potential to be lucrative for your business. Following this, carrying out SEO work for a particular page can increase its relevance to a certain topic, improve the landing page experience and much more. All of this can help reduce the CPC of your PPC ads, making them more efficient. 

If you want to learn more about PPC ads, SEO or just digital marketing in general, don’t hesitate to contact a member of our team. At First Page, we create tailor-made digital marketing strategies for brands looking to heighten their online presence. Become an industry leader with us starting today.