Paid Search Advertising (PPC): How it Works

In today’s ever-expanding digital marketing world, there are a plethora of options to reach potential customers. But if you’re looking for the most cost-effective way to drive leads and sales growth — look no further than Paid Search Advertising (PPC).

PPC stands for pay-per-click. You may know it by other names, such as SEM or search engine advertising, but whatever your preferred name for Paid Search Advertising is, utilizing paid search correctly can be extremely beneficial and yield great returns.

With Paid Search, you can create ad campaigns that target customers ready to purchase and take advantage of one of today’s most powerful digital marketing tools.

Let’s break down what paid search is, how it works, and how it’s different from SEO.

What is Paid Search Advertising?

Paid search is a form of digital media buying where you pay search engines such as Google or Bing for ad space on their search engine results page (SERP).

Before you can start using this powerful digital marketing tool, know that it involves crafting campaigns around four key elements:

  1. Keywords – The paid search ecosystem centers around keywords. Keywords represent a user’s wants or needs. The way a person searches for a product or service will often provide insight into where that person is on their buyer’s journey.

    Success depends on the skillful navigation of the paid search marketing ecosystem. Keyword research is essential for success. Crafting keyword-searchable terms that show what people need throughout their buyer’s journey is important.

  2. Ads – Paid search ads are text-based advertisements that typically appear above and below organic search results on a search engine results page. They can also appear on Google Maps, besides local listings, YouTube, and other keyword-related environments.
  3. Campaign structure & targeting – Campaigns and ad groups organize paid search campaigns. The campaign level is where you set daily budgets and other targeting criteria (Geography, day-part, etc.).  Ad groups will go under a campaign to group similar keywords with the most relevant ad text.  You can also control bidding and other tracking parameters at the ad group level.
  4. Bidding – Pay-per-click works just like it sounds. You only pay when someone clicks on your ad. What’s even better, you can set a maximum bid for each keyword to ensure you never pay than you want for a click.

How Does Paid Search Work?

The paid search process begins when an advertiser or an advertiser’s digital advertising agency identifies keywords that can drive business value.  From there, maximum bids are set for each of the selected keywords.

Paid search uses an auction system to determine which ads show on the Search Engine Results Page (SERP).  The auction results also dictate how the ads rank.  It’s important to note that bidding more for a keyword than a competitor won’t guarantee a higher ranking. When determining your ad rank, a keywords’ quality score and the maximum bid will determine where you rank.

How are Paid Search Ads Ranked?

When ranking an ad, search engines use two factors – maximum bid and quality score.   The maximum bid is straightforward.  It’s how much you are willing to pay if someone clicks on your ad. The quality score is more involved and is affected by keyword and ad relevance, landing page experience, and expected click-thru rate (CTR).

 Three major PPC ad components to focus on are:

  1. Landing Page Experience – The landing page is an essential part of your ad. Ensure your landing page is relevant to the keyword search, provides a fast and seamless user experience, and delivers what the ad text promises.
  2. Ad Relevance – Searchers are looking for specific products, services, and information, so your ad needs to be highly targeted and relevant to users.
  3. Expected Click-Thru Rate (CTR) – How likely is your ad to be clicked on? Google estimates CTR on your historical performance, similar advertisers’ historical performance, and the Google Ads features you use.

Writing Paid Search Ads

Writing Paid Search text ad copy is a critical part of any PPC campaign. The key to writing ad copy is to make sure it’s relevant, specific, and engaging to your target audience. Your ads should be concise and to the point, making sure to use the keywords you are bidding on.

The components of a Paid Search ad include:

  • Headline
    This is the main title of your ad that appears in bold text at the top of the ad on the search results page. It is limited to 30 characters.
  • Description Lines
    These are two short lines of text that provide more details about your product or service. Each line is limited to 90 characters.
  • Display URL
    This is the visible URL that appears beneath your ad. It can be customized to show your brand name or relevant keyword.
  • Final URL
    This is the landing page URL that users are directed to when they click your ad.
  • Ad Extensions
    These are additional pieces of information that can be added to your ad to provide more context and encourage clicks. These could include location information, costs, or other important information for your audience.

What is the Difference Between Paid Search and Organic Search?

Organic search results appear on the same page with paid search ads. However, instead of placing bids and paying-per-click to appear, you earn organic search results by investing in Search Engine Optimization (SEO). Organic results are free listings that appear in search engine results pages (SERPs) because it’s relevant to someone’s search terms. Businesses use SEO to optimize their site’s visibility or rankings in search results to increase website traffic, attract more leads and customers, and ultimately drive revenue.

So, organic search marketing is the better option? Not necessarily. There is still a cost-per-click (CPC) to SEO.

SEO takes time. Depending on how established your website is and the popularity of keywords you want to rank higher for, it can take months or even years to get in the top 10 results. Every hour you, your employees, or your digital marketing agency spend working on SEO content costs money.

Paid search can get your ads to appear on the first page of results quickly. This is possible with the right strategy and content for the keywords that are important for your business.

In today’s digital-first marketplace, thriving businesses use paid search advertising and search engine optimization strategies to gain an advantage over the competition.

Learn more about Search Engine Optimization (SEO) and why it matters.

Learn more about Paid Search Advertising (PPC) and why you need it.

Not sure where to start or what questions to ask?  We developed our pathfinder™ process just for you.



In today’s ever-expanding digital marketing world, there are a plethora of options to reach potential customers. But if you’re looking for the most cost-effective way to drive leads and sales growth — look no further than Paid Search Advertising (PPC).

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