John Lincoln

How Does Pay Per Click Work? Ultimate Guide to Understanding PPC

How Does PPC Work? The Ultimate Guide to Understanding PPCAs valuable as organic brand discovery is, there’s no denying that paid ads play a major part in promoting your business.

Better yet, PPC is more effective at getting new eyes and leads fast.

So, how does PPC work, and what are all the moving parts in pay-per-click marketing?

What We’ll Cover:

What Is Pay-Per-Click In Marketing?

Knowing the answer to “how does PPC work?” starts with covering the basics of pay-per-click marketing.

PPC is a type of advertising in which marketers will publish an ad and pay a cost every time a user clicks on their ad. This cost is called the cost-per-click (CPC).

CPC is not always the same, since advertisers will go through an auction to land a spot on digital real estate. Ad locations include Google SERPs, Facebook feeds, and more.

What is PPC Marketing?
What is PPC Marketing?

The idea of paying for every click you get makes sense—after all, the more clicks you’re getting, the likelier you are to rake in conversions. And while it sounds simple enough, PPC is an entire ecosystem of content, copywriting, ad budgeting, and SEO.

Each ad must have associated landing pages that are primed for your audience. Ideally, you’ll have an entire funnel set up for users to navigate. Your campaign is nothing without keyword research, and you’ll only get so far if you don’t have the wherewithal to allocate your campaign budget correctly.

Why Businesses Use PPC

According to Unbounce, half of the people who land on a retail site from a PPC ad are more likely to convert than organic users.

That’s a big difference for a seller’s bottom line, and it’s a great example of why businesses use PPC.

PPC is an effective form of advertising to new and existing audiences alike. It isn’t the whole marketing mix, but it’s particularly good at inviting users to your website. For business leaders who feel like they’re missing something in their approach, PPC could be the loose puzzle piece.

How Does PPC Work? Let’s Dive In

Clutch.co tells us that a third of people click on PPC ads because they directly answer their questions. Advertisers create PPC campaigns with this in mind.

PPC Ads Statistic
PPC Ads Statistic – Clutch.co

The existence of PPC is evidence of this idea of digital real estate. It’s reminiscent of billboards or TV commercial slots. While virtual property may not be tangible, it’s extremely valuable. The top of a search engine results page, the sidebar of a social media feed—these are all places that people hang out on the web. And advertisers love to be where people gather. It’s like an experiential advertising tactic, but for the internet.

The cool thing about PPC is that its impact is a lot more measurable than those experiential campaigns. You don’t have to wonder who’s going from ad to landing page to conversion, because you’ve got all the information right there.

Plus, you’re only paying for how impactful the ad ends up being. That’s a lot easier for many businesses than shelling out a flat rate or a cost-per-thousand-impressions (CPM) for ad space only to get no clicks.

The Experts Weigh In On Pay-Per-Click Marketing

Take a look at a recent webinar I hosted with Google on paid media with the largest search engine in the world:

I joined forces with some PPC experts at Ignite Visibility as well as Jordan Ludwig, Partnership Manager at Google.

We talked about what it takes to create a successful paid media campaign. We boiled the best practices down into the three key pillars:

  1. Create a growth-oriented framework. This means defining, measuring, and reporting on visibility, traffic, engagement, leads, and revenue.
  2. Capitalize on innovative features. For example, Google’s Discovery Ads were released out of beta in 2020.
  3. Maximize the user journey. This means working to optimize conversion rates, using analytics, and understanding buyer habits to improve retargeting efforts—just to name a few.

How Does PPC Work On Different Platforms?

PPC is not the same across all platforms. You can practice pay-per-click marketing on:

  • Google Ads (for Google SERPs)
  • Amazon PPC (for e-commerce sellers)
  • AdSense (for websites running ads on their sites)
  • Microsoft Ads (for Bing, Yahoo and Microsoft)
  • Facebook Ads (for advertising on Facebook, of course)
  • Native Ads (from big companies like Outbrain and Taboola)
  • Yelp Ads (yes, it’s real!)
  • YouTube Ads (you pay when people watch your videos)

Facebook, Google, Bing, and native ads are particularly influential in the world of PPC. Even Yelp has an effective PPC program for businesses providing goods or services in the community. Yelp PPC is one of those things that’s doable if you have some money in the budget left over after launching Microsoft and Google ads.

For native ads, your content shows up as part of an external article or blog post. It feels very natural and can be extremely effective in building traffic.

Google Ads Auctions and PPC: What to Know

Keyword bidding looks different for Facebook than it does for Google, but Google Ads gives us a good starting point for auctions.

Google does provide users with a suggested bid. You don’t have to follow this outright, but bidding too far below the suggested bid could mean your ad won’t show up for users enough to get any clicks. In that case, you’ve put in a lot of work for nothing.

Staying in line with the suggested bid is a good starting point for PPC beginners. As you develop experience, you’ll learn what works and what doesn’t. You may need to increase your bids for better results or you might find that you don’t need to bid quite as much for certain keyword groups.

Bidding does play a big role in ad placement, but the quality of your ad is just as important. Google’s quality scoring rubric is made up of factors like landing page relevance, keyword relevance, and click-through rate. Your ad rank is your ad quality multiplied by your bid.

Google also uses a bid system that charges you for the number of clicks you receive times the rate of the second-highest bidder, so you won’t pay the full rate you’re allocating (Amazon PPC works the same way).

Interestingly, Google adds a penny to your total fee. Maybe it’s for good luck.

What Is Pay-Per-Click Like On Google vs. Microsoft?

Google has a sweeping search engine market share of 86.6%, compared to Bing’s market share of 6.7%.

However, Microsoft PPC functions across Bing, Microsoft, and Yahoo. Don’t underestimate the power of Microsoft.

Google and Microsoft PPC function in very similar ways. They have bidding auctions, search and display ads, advanced targeting, advanced ad placement, and more.

Microsoft ad users can set monthly budgets while Google users set budgets daily. Microsoft has slightly better location targeting options, simply because you can schedule at both the campaign and group levels (for Google, it’s only possible at the campaign level). For the record, CPC for Bing tends to be much lower than Google.

Scheduling differs between the platforms. For Microsoft, you time a campaign based on the timezone of the viewer. For Google Ads, you only consider your time zone.

Finally, Bing demographics skew older, but it doesn’t make much of a difference when you consider all of Microsoft’s other strongholds.

How to Choose a Platform Based On What You Want to Target

The key differences between all PPC platforms are their unique targeting strengths. That’s why a multi-pronged approach to paid media is so smart—you get the benefits of multiple platforms.

Microsoft and Google deliver the best keyword targeting abilities.

Facebook’s strengths lie in target market and demographic data. Location settings are common among all PPC platforms.

Both Google and Facebook do well with retargeting and custom lookalike audiences.

Any display ads do well with targeting by interests, site visits and past behavior.

Targeting capabilities are always changing, especially as the third-party data discussion rolls on. Innovations will only add to the complexity over time.

What You Need to Build a PPC Campaign

What are the ingredients for a PPC campaign? Here’s the rundown.

  • You’ll need an ad group. This means a group of related ads, which make up a campaign. For example, a tool company may have a selection of PPC ads prepared ahead of Father’s Day.
  • You’ll need keywords and lots of them. Each ad group requires tailored keyword groups as a sort of signal for the PPC ad platforms of where to display your ads. For example, around Father’s Day, you might use keywords like “outdoor Father’s Day gifts” for one ad group and “affordable Father’s Day gifts” for another.
  • Ad copy is a must. At the risk of sounding like a Mad Men aficionado, your ads are nothing without a good copywriter—especially one who understands the different parts of the sales funnel.
  • What’s a PPC ad without an associated landing page? Don’t let your ad simply take up space. Direct users to a landing page that piques their interest, drives traffic, and drives conversions.

Let’s touch on those keywords. How do you select the best ones? You can use tools like SEMrush to get a stronghold on your competition. The Keyword Planner on Google Ads will deliver solid keyword variations.

Google Ads Keyword Planner for Pay Per Click Planning
Google Ads Keyword Planner for Pay Per Click Planning

You’ll have to align your keywords with your ad budget. Running the best terms will help you get the most bang for your buck. Over the next few quarters, you can adjust your keyword strategy based on the performance you’re getting.

Wondering what the best number of keywords to have in each ad group is? You’re not alone. In this case, quality really does beat quantity. Keep your keyword count below 20 and ensure each one is relevant and valuable to your industry and product or service.

The Real Cost of PPC Lies In Your Cost-Per-Click

The cost of PPC comes from your cost-per-click, or CPC. This is because you only pay for each click you get in a PPC campaign.

The actual price of your CPC will vary from keyword to keyword and from campaign to campaign. Things like time of year, platform, and terms all play a role in CPC.

If you want to reduce your CPC on Google Ads, you’ll need to improve your ad’s quality score. This means optimizing your design, copy, and landing page for a higher CTR plus better SEO and UX.

You might have to shell out for the initial PPC investment, but you can start small to ensure you are making the best marketing decisions as you scale. Above all else, consider your ROI and ROAS. If you’re making enough money over your initial investment for your PPC marketing campaigns, you’re doing it right.

How Much Does a PPC Campaign Cost?
How Much Does a PPC Campaign Cost?

How Long Does It Take to Launch PPC Ads?

When considering the length of PPC campaign creation, you need to factor in a few things:

  1. The time it takes to create the different ad elements, such as design, copy, and landing page.
  2. The ad launch process.
  3. The time between ad submission and how long it takes to start running.

All in all, your creative period may occur over a few weeks. It will take another 1–2 weeks to put everything together and launch the ad, and another day or so until the ad starts running. You may be able to optimize your efficiency as you get better at PPC management.

Ways to Optimize Your PPC Campaigns

Many marketers run into some common obstacles in their PPC campaigns. If you can avoid the most prominent mistakes and focus on the best practices, you’ll do yourself lots of favors.

Make sure your ad goals are lined up with your keyword match preferences. On PPC platforms, you have the option to do a broad match, phrase match, or exact match. Phrase and exact matches are ideal because broad matches won’t hone in on your target audience well enough. Choosing between phrase and exact match depends on the keyword in question and what your specific ad goals are.

Keyword Match Preferences
Keyword Match Preferences

You should also take advantage of negative keyword features, which keep your ad off of particular keywords you don’t want to rank for.

Failing to split test (aka A/B test) your ads leaves money on the table. Don’t be that marketer…

Meanwhile, your keyword limit for an ad group should be about 20—but your keyword limit per ad should just be one.

As valuable as CPC is, don’t let that be your only measurement. Focus on different types of conversions you’re after, which will vary depending on which part of the funnel you’re focusing on (i.e. first-party data submission or a sale).

Here’s one last best practice for you: Give your all for those landing pages. Don’t just link to your home page and call it a day, because that’s just going to drive your bounce rate up more than anything. PPC marketing requires effort from all angles, including landing pages.

Bottom Line: Is PPC Best Suited for the Pros?

You can definitely learn the ins and outs of PPC, but the fact of the matter is this: PPC auctions can be complex and time-consuming.

A bidding strategy requires you to maximize your conversions by bidding high, prioritizing cost-per-acquisition (CPA) instead of CPC, or focusing on return on ad spend (ROAS). The chosen bidding strategy depends on the situation at hand, and an expert can surely help you pick the right one.

Plus, PPC management ensures you’re covering all your bases as you continue to grow your business.

Does pay-per-click work? Definitely. The top-positioned ads make up 12–25% of all clicks on search engines. You just have to make sure to do it right.

Don’t know where to start with PPC? Try my 90-day paid media strategy to find your winning campaigns. Check it out below!

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John Lincoln is CEO of Ignite Visibility, one of the top digital marketing agencies in the nation. Ignite Visibility is a 4x  Inc. 5,000 company. Ignite Visibility offers a unique digital marketing program tied directly to ROI with a focus on using SEO, social media, paid media, CRO, email, Amazon and PR to achieve results. Outside of Ignite Visibility, Lincoln is a frequent speaker and author of the books “Digital Influencer” and “The Forecaster Method.” Lincoln is consistently named one of the top digital marketers in the industry and was the recipient of the coveted Search Engine Land “Search Marketer of The Year” award. Lincoln has taught digital marketing and Web Analytics at the University of California San Diego since 2010, has been named as one of San Diego’s most admired CEO’s and a top business leader under 40. Lincoln has also made “SEO: The Movie” and “Social Media Marketing: The Movie.” His business mission is to help others through digital marketing.

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