What Does PPC - Pay Per Click Mean?

PPC is a digital marketing model, based on keywords. It drives online traffic by essentially “buying” visits to a certain page. As the name implies, the advertiser pays a fee for every user click on their ads.
Zaid Abdullah
min read

What does PPC mean?

PPC stands for pay-per-click.

PPC is a digital marketing model, based on keywords. It drives online traffic by essentially “buying” visits to a certain page. As the name implies, the advertiser pays a fee for every user click on their ads.

There are two main types of PPC models that define advertising costs differently:

  • Flat-rate model
  • Bid-based model

With the flat-rate pay-per-click model, there is a fixed fee the advertiser pays for a click. As for the bid-based model, the advertising rate depends on a bid. The bid is the highest cost an advertiser is willing to pay for a click, saving them an ad spot.

Where is PPC used?

The advertising model is used by marketers to reach a wider audience with a specific interest in the product, service, resource, or offer that is being advertised.

PPC campaigns allow advertising businesses to analyze which keywords are most applicable to their brand, services, and products. The keywords that perform well in ads are could be integrated into other types of ads and online content aimed at bringing organic traffic.

Pay-per-click marketing campaigns are usually associated with search engine advertising. Those types of ads are shown above the organic results and displayed as a sponsored link.

For this to happen, the user query should match the targeted keywords set by an advertiser, bidding for ad placement. Displaying an ad on Google as a top paid result depends on keyword relevance, Quality Score, ad copy, and landing page quality.

There are different types of social media advertising. Some of the major social platforms offer an advertising option to run ads applying the PPC model, for example - Facebook and Twitter.

How can you calculate PPC?

Since PPC is not a metric, it cannot be calculated. Yet, the concept of pay-per-click campaigns is simple, so it is easy to define PPC ad performance.

Campaign success could be “measured” by focusing on key performance indicators such as CPC (cost-per-click), CTR (click-through-rate), or/and ROI (return on investment).

The most basic PPC formula to follow is the one that defines how much you pay for each click on the ad group:

  • CPC (cost-per-click) = Total Ads Cost / Number of Clicks

Another related formula that could be helpful is the one that calculates how effective your ad is. Measure effectiveness by comparing how many users see your ads and how many clicks they generate:

  • CTR (click-through-rate) = (Number of Clicks / Impressions) x 100

An alternative way to understand your PPC data is to calculate the campaign's Return on Investment that provides invaluable insight into ad performance.

ROI not only shows which advertisements bring leads, drive conversions, and boost sales but also which ones are profitable. Use this calculation to determine the ROI of your ads:

  • ROI% = ((PPC Revenue - PPC Cost) / PPC Cost) x 100

Other significant metrics that could help measure PPC campaign results are Conversion Rate and CPA (cost per acquisition). It all depends on your internal business and campaign goals.

Why is PPC important?

PPC is an important advertising model as it provides rich performance data. The data allows businesses to gain insight into ad effectiveness and make proper adjustments to their campaigns.

Ad performance insights could also be used to find relatable keywords that rank well with paid search. The same keywords could be utilized to enforce organic brand content and prioritize SEO efforts.

There are different conversion goals with PPC campaigns (make a purchase, complete a poll, sign up for a free trial, etc). Yet, results are easy to track and measure, which contributes to reaching advertising and marketing goals faster.Pay-per-click ads are also a viable way to increase brand visibility by displaying your offering only to potential buyers and prospects with matching interests.

Essentially, that brings more visitors to your website and potentially grows your customer base, without the SEO struggle of organic ranking.

What is a good PPC for ads?

In most cases, a “good” PPC is defined by a high conversion rate. The higher the conversion rate, the higher the percentage of users who convert after a click. When other internal and external factors are not in question, a high conversion rate is enough to deem a campaign as successful.

Conversion rate% = (Conversions / Clicks) x 100

Conversions have different scopes, depending on marketing goals. In some ad campaigns, a conversion would be a purchase, in others, it could be a subscription, registration, or another type of action or acquisition.

Alternative ways to define a good PPC campaign are by focusing on the CTR metric and the return on investment and comparing recent results with predictions and stats of previous campaigns.

Example usage of PPC in a sentence

The average conversion rate of our PPC campaigns is 4%


hello world!

Stay on top of Marekting Trends.
Join our Newsletter: