What is PPC (pay-per-click) advertising?

What paid advertising is, in plain terms

Paid advertising means paying a platform to show your message to a chosen audience. The most common version is pay-per-click (PPC): you set a budget, the platform shows your ad, and you are charged when a person clicks through to your website.

This is different from SEO, where you earn visibility without paying per visit. Paid ads start the day you switch them on and stop the day you switch them off. That makes them fast and measurable, and also means they never build an asset the way a good page or a strong reputation does.

Not every paid model is pay-per-click. Some campaigns charge per thousand views, and some charge per view of a video. The click model dominates search and is common on social, so it is the right place to start.

Search, social, display and video: four different jobs

Search ads appear on the results page when someone types a query. Google describes Search campaigns as text ads that reach people who are actively looking for what you offer (Google Ads Help, "Choose the right campaign type", as of October 2026). The person has already stated a need, so intent is high and so is competition.

Social ads, on Meta (Facebook and Instagram) and similar platforms, find people by who they are and what they do, not by what they just typed. Nobody on Instagram is searching for an accountant. You are interrupting, so the ad has to earn attention before it can win a click.

Display ads are image ads placed across websites and apps. Google describes Display as a way to extend reach beyond Search and to re-engage people who already visited your site. Video ads run on YouTube and other sites and suit awareness and consideration more than immediate sales.

• Search: capture demand that already exists. Best for urgent or specific needs.
• Social: create demand among people who fit your customer profile. Best for visual, impulse or considered purchases.
• Display and video: stay in front of people over time and bring back past visitors.
• Performance Max: Google’s automated campaign type that runs across its inventory from one campaign. Powerful, but it gives you less control (see Google Ads account structure).

How the auction decides who is shown and what you pay

Every time a search happens or a page loads, an ad auction runs in a fraction of a second. Google states that separate auctions run for each ad location and that ads are ordered by Ad Rank, which combines several factors: your bid, the quality of your ads and landing page, minimum quality thresholds, the context of the search, and the expected effect of ad assets such as phone numbers or extra links (Google Ads Help, "How the Google Ads auction works").

Your bid is the most you are willing to pay for a click. Google states you often pay less than that maximum. Google also states that a relevant ad with strong assets can win a higher position at a lower price, even against higher bids. That is the single most useful fact in paid search: quality is a discount.

Meta works on the same principle with different parts. Its explanation of ad auctions says the auction does not simply pick the highest bid, and that estimated action rates and ad quality together measure how relevant an ad is (Meta for Business, "Ad auctions explained"). Ads that break Meta’s advertising standards are rejected.

What drives the cost of a click

Nobody publishes one cost per click that applies to you, and anyone quoting a fixed number is guessing. Cost per click is a result of the auction, so it moves with competition, relevance and context. A rule of thumb that holds everywhere: the more advertisers want the same searcher, and the more that searcher is worth, the higher the price.

Cost per click is only the first number. What matters to the business is cost per lead or per sale. Take a click costing a fixed amount and a landing page where 1 in 20 visitors enquires: the cost per enquiry is 20 times the click cost. Double the enquiry rate and cost per enquiry halves, with no change to the auction.

• Competition: how many advertisers bid on the same searches, and how hard.
• Relevance: how closely the ad and landing page match what the person asked for.
• Intent: searches that signal buying (a service plus a place) cost more than learning searches.
• Context: location, device, time of day and the other ads on the page all shift the price.
• Your own conversion rate: it decides what a click is worth, and so what you can afford to pay.

How to start without wasting money

Start from the business number, not the ad. Work out what a new customer is worth to you and what you can afford to pay to get one. That is your ceiling for cost per lead or sale. Without it, every campaign looks fine or terrible depending on your mood.

Next, pick one channel that matches intent. For a business whose customers search for it, start on search. Build a tight account (see Google Ads account structure), send clicks to a page built for one action (see Landing pages for ads), and install tracking before you spend a cent (see Conversion tracking and attribution).

Then run it long enough to learn. A week of data from a handful of clicks tells you almost nothing. Decide the review date in advance, and judge the campaign on leads or sales, not on clicks.

How to measure whether it is working

Track four numbers in order. Spend, clicks and click-through rate (clicks divided by views) tell you whether the ad is attracting attention. Conversion rate (conversions divided by clicks) tells you whether the page and offer work. Cost per conversion tells you what a result costs. Revenue or margin per conversion tells you whether you should keep going.

Be careful with platform-reported conversions. Each platform counts the results it can see and tends to credit itself. Compare what the platform says with what your own records say: calls answered, forms received, orders in your shop. When they disagree, your records win. The causes of the gap, including attribution, are explained in Conversion tracking and attribution.

When paid advertising goes wrong, and what is changing

The common failures are quiet. Budget goes to broad searches that never buy and that negative keywords would have blocked, the ad promises something the page does not deliver, or tracking counts the wrong event, so the platform’s automation learns from bad signals. Each one looks like “ads do not work” from the outside.

The direction of travel is more automation. Google’s Performance Max runs across Search, YouTube, Display, Discover, Gmail and Maps from a single campaign (Google Ads Help, "About Performance Max campaigns"), and bidding is increasingly set by the platform. Automation rewards clean conversion data and clear goals, and punishes vague ones. The owner’s job moves from pulling levers to supplying good inputs: accurate tracking, strong offers and fast pages.