How Does PPC Marketing Work?

When you do a search on Google, more often than not the first results you notice have that little green square that tells you they’re an “Ad.” These are PPC ads. 

For anyone that does online marketing or runs a business, understanding how a PPC strategy works is a valuable way to increase your marketing skill set and find new customers. But as with many types of marketing for beginners, learning all about PPC can seem a bit overwhelming at first.

This post will cover most of the basics you need to understand how PPC works.

Defining PPC (Pay Per Click) Marketing

First things first, you need to know what PPC even is. The acronym stands for pay-per-click, which is a type of advertising where the advertiser only pays for each time an ad produces a visitor to your website. 

In comparison to traditional advertising channels like TV commercials or direct mail, where advertisers spend a lot of money to reach as many people as possible and hope some of them pay attention and convert, PPC marketing provides a more cost-efficient model to businesses. 

With pay-per-click advertising, you know that every dollar you spend is tied directly to someone taking action to learn more about your business or products. 

Most of the time when someone talks about PPC, they’re referring to those ads that show up at the top of the page in Google, but that’s actually only one small subset of what PPC refers to. pay-per-click advertising is also common with social media platforms, the ads you see on YouTube, and the banner ads that show up on popular websites around the web. 

How Does PPC (Pay Per Click) Marketing Work?

To understand how pay-per-click marketing works, it helps to break it down into some of its main components.  

How PPC Auctions and Bidding Work

One of the most important parts of PPC is how payment works—after all, the very name most people use to describe it references an aspect of the billing process. PPC platforms use an auction system to sell ad placements. Advertisers create ads, specify where and how they’d like them to show up and define how much they’re willing to spend.

Because it’s a bidding system, how much you spend will directly relate to what ad placements you get. The platforms base what they charge on how competitive certain placements are. 

For instance, a popular keyword that shows purchasing intent, like “accounting software” will be worth more than a long-tail keyword that shows educational intent, like “tips for tracking my spending”—although both might be valuable for an accounting software company to bid on.

There are a few key concepts and advertising terms that will help you better understand the auction and bidding process.

CPC

CPC stands for cost per click. Just like it sounds, it’s the amount you’ll spend each time a person clicks on your product ads. 

PPC platforms provide an estimated CPC for certain keywords and ad placements, so you can make informed choices about where to invest your budget and how much to commit to your campaigns. 

Be aware that the estimates won’t always be exact, it’s the platform’s best guess based on how competitive the keyword has been in the past, and amounts are subject to change day-to-day based on how many people are vying for those spots. But they give you a good idea of what to expect, and you can set a maximum bid for each keyword or campaign so you don’t inadvertently pay more than you’re comfortable with. 

Quality Score

While every PPC platform is out to make money from advertisers, they also value delivering a good experience to users. For that reason, they value relevance in the ads they show. Along with budget, one of the main factors platforms use to determine which ads win the top placements is quality score (Facebook calls it a relevance score, but it’s essentially the same thing).

The quality score is determined based on factors like your ad’s click-through rate (CTR), the relevance of your ad to the keywords you’re targeting, and the relevance of your landing page (determined based on user behavior once they click). 

In other words, if your ads don’t perform well, not only does it mean you’re spending money on worse results, it also means your future performance will suffer due to having to pay more for worse placements. 

Ad Rank

Your ad rank is where you show up in the PPC results. This is particularly relevant for ad placements where multiple ads show up in a row, as with on the Google search engine results page (SERP). Ad platforms have an algorithm that determines ad rank based on the amount an advertiser is willing to spend on the bid, along with the ad’s quality score. 

In other words, if you have a competitor with a good quality score willing to spend more per click, they’ll show up above you for that keyword. But if the same competitor’s quality score is low and yours is high, you may be able to win a higher rank even with a lower bid. 

Maximum Daily Budget

No marketing department has unlimited money. Auctions can be tricky, since spending more is often the best way to assure you get the placements you want, but you also need to keep your ad spend under control to keep from going under budget. In addition to clarifying a maximum CPC bid you’re comfortable with, you can also set a maximum daily budget. 

The ad platforms will bid on the relevant placements for you throughout the day—for as long as you have remaining budget—then stop once it’s tapped out. 

Be aware that if your maximum daily budget is too low for the keywords you want to target, you risk running through it within the first few hours and missing out on some of the prime times of day for getting clicks. Make sure it’s not too high for you to stay within your budget for the month or quarter, but not so low that you miss out on the best opportunities for reaching your audience. 

Manual and Automatic Bidding

Anyone that does paid search has two options for the bidding process: you can handle it manually, or you can let the platform do much of the work for you. Manual bidding can be a good choice for PPC professionals who are well versed in the process and have time to monitor campaigns throughout the day. 

For most businesses who do PPC though, it’s more practical to stick with automatic bidding. With automatic bidding, the platform’s algorithm will automatically select the bids based on what past data suggests will get you the right results. If you don’t have time to monitor your accounts full time or the skills to make the best choice in every campaign, then automatic bidding is the more practical choice.

What is PPC Targeting?

One of the big benefits of PPC is that it allows you to reach a huge portion of the world’s population. Most people in the United States are on at least one of the main social media platforms, and most of those people visit social media sites more than once a day. One survey found that 97% of people use search engines at least once a day. 

But most marketers don’t need to reach everyone with their product ads. 

You get more value from your advertising if you’re able to get it in front of the right people—those most likely to buy your products or services—instead of all people. PPC platforms provide extensive targeting options to help you effectively do that. 

In particular, you can use four powerful forms of PPC targeting.

1. Keyword Targeting

For any advertising to work, you need it to show up for someone in your target market at the time they’re looking for what you’re selling. With tactics like billboards and commercials, you’re playing a numbers game and hoping for the best—if 100,000 people see that billboard today, hopefully at least one of them needs the product featured on it.

But with PPC, keyword targeting ensures that every ad will only display at the moment someone is actively searching for what it sells. That vastly increases your chances of reaching the right person at the right time to land a conversion. Keyword targeting is therefore a huge part of PPC. 

Any good PPC strategy will include keyword research to learn which terms your audience is using, how competitive they are, and what the average CPC for each term is. With that information, you can craft your PPC campaigns to target the keywords that will bring in the most ROI, and analyze your results as you go to refine your keyword strategy based on what’s delivering results. 

2. Geographic Targeting 

Another key targeting option available with PPC campaigns is geographic targeting. If you run a local business, you only need your PPC ads to reach people in the particular community you serve. Even if you have a global or national business, you may want to create different ads for people in different areas based on the language or cultural trends common in each place. 

Geographic targeting lets you limit the audience for each ad campaign based on city or state, so you only pay to reach the communities relevant to your ads. 

3. Audience Targeting

Marketing tactics are generally more successful when they’re focused on a specific buyer persona—the description you develop of what your ideal customer looks like. With PPC audience targeting, you can use the audience categories PPC platforms create based on the extensive data they have to only display ads to the people that best match your personas.

You can target different campaigns at different audiences, and tailor the ads in each to better appeal to the specific people that will be seeing them. 

PPC platforms provide audience targeting categories that include:

• Demographic information – You can limit who will see your ads based on categories like age and gender.
• Interest data – Search engine and social media sites have a lot of data on what people are interested in. You can set up audience targeting for people who are really into specific categories like cars or books. 
• Behavioral details – The platforms also have data on likely behaviors users will take. If their recent searches suggest they’re actively looking to buy a new bike or they’re in the throes of planning a big wedding, those are behavioral categories you can use in your targeting.
• Devices – If you’re confident a particular ad will work better on a big screen than a mobile device, you can also use device targeting to limit the type of screen people will see your ad on.

4. Remarketing

Many of the visitors to your website will be people who are interested in your products or services, but are not yet ready to buy. Once they leave your website, there’s a risk that they’ll forget all about you. 

A useful feature PPC platforms offer is remarketing, which allows you to serve up ads to your past website visitors based on the pages they visited on your site and the actions they took there.

If it’s clear they like a particular dress, or have a problem your software helps solve, you can ensure they see ads highlighting that dress or explaining how your product solves their specific problem. It’s one more way you can use PPC to deliver a relevant message to someone in your audience at the moment it’s most valuable to them. 

PPC Ad Extensions

For ads that show up on the SERP, you can use ad extensions to include more useful information. Ad extensions are free, and can increase your click-through rate (CTR) and thus your quality score by giving your audience more relevant options for actions to take.

Some examples of popular ad extensions include:

Sitelink extensions

Rating extensions

Location extensions

Product and price extensions

Call extensions

Promotion extensions

PPC ad extensions can be a smart way to draw attention to the action you want your audience to take, and increase the odds of them taking that action. 

How the Google Display Network Works

The ads that show up in the SERP are a huge part of search engine PPC, but the Google Display Network extends the functionality of the company’s ad platform considerably. The Display Network includes millions of websites around the web, including popular sites like the New York Times. 

Anytime you see a banner ad on a media, entertainment, or business site, there’s a good chance that it’s a Google Display Network PPC ad. 

Managed or Automated Placements

When you use the Google Display Network, you get to choose between managing where your paid ads show up manually, by specifying the domains, videos, games, or mobile sites where you want to buy placements. If you have a pretty good idea of the specific sites your audience likes to visit, using managed placements gives you control over where your audience will encounter your messaging.

If you’d prefer to take a broader approach with your marketing strategy, Google lets you specify general topics or keywords that are relevant to your ads, and the platform’s algorithm chooses relevant placements around the web for you. This can allow you to reach your audience in places you wouldn’t know to think about, expanding your reach, but it comes with the tradeoff of having less control over when and how they encounter your ad.  

Types of Google Display Network Ads

You have a few different options for types of PPC ads you can create on the Google Display Network:

• Text ads – These aren’t used as commonly on the display network as on the SERP, but you can choose to run ads that are made up primarily of text and a link.
• Image ads – One of the most common types of ads on the display network, this includes most of the banner ads and smaller image ads you see when you’re browsing the web. 
• Animated ads – These are like image ads, but with movement. Animated ads can include up to 30 seconds of animation that then starts over. 
• Video ads – You can run video ads on YouTube, and on other sites around the web. 
• Gmail ads – If you use Gmail, then you’ve probably seen these ads that show up at the top of your inbox and resemble emails.

The display network provides a lot of variety in how you reach your audience and what you choose to show them once you do. 

How Social PPC Works

A lot of the conversations about PPC revolve around search engine PPC, but most of the main social media platforms also offer PPC advertising. 

Facebook PPC Advertising

With over 2 billion users, Facebook remains the primary behemoth in the social media space. Facebook PPC advertising is therefore a popular option for many businesses. Facebook PPC works much like search engine PPC, with a bidding process, audience targeting, and different ad options (image, video, slideshow, etc.). 

In recent years, as organic reach on Facebook has decreased significantly for many brands, Facebook advertising has become the best way to make sure your content and ads get seen by users on the platform.  

Instagram PPC Advertising

With over 700 million users and higher engagement numbers than Facebook, Instagram has become a major player in the social media space. Because Instagram is owned by Facebook, their PPC options and platform are essentially the same. That makes Instagram PPC advertising an easy add-on for anyone doing Facebook PPC campaigns. 

Twitter PPC Advertising

Twitter trails Facebook and Instagram in users, but between having a high rate of brand interaction and fewer advertisers to compete with, Twitter PPC advertising is another good option for many brands. They offer extensive targeting options, including geographic, audience, and behavior targeting. And you have a few different ad options with them, such as promoted tweets, promoted accounts, and promoted trends. 

LinkedIn PPC Advertising

For B2B brands, LinkedIn PPC advertising is well worth considering. The platform has about 100 million active users, plenty of targeting options, and a few different types of ads you can deploy. You can use text ads, sponsored content, or sponsored InMail for a more direct way to reach target accounts. 

PPC is Good for ROI 

Every marketer and business owner today has to weigh the value of a long list of marketing tactics in order to figure out the best place to put their budget. While PPC usually works best when it’s one tactic used in tandem with others, it’s a smart choice for the significant return on investment (ROI) it provides. 

Google says advertisers earn an average of $2 back for every $1 they spend. With PPC, you have a lot of control over where your paid ads go and who sees them. And because PPC platforms provide extensive analytics, you have the power to tweak your campaigns based on data for ever better results over time.

But as with any type of marketing, getting started with PPC can be overwhelming. If you want to do it well from day one—without having to commit more time than you can afford to learning and managing it all yourself—you’ll be better off hiring a skilled PPC professional to help. 

Contact us to learn more about HostGator’s PPC services.