Definition
What is PPC (pay-per-click)?
PPC (pay-per-click) is the advertising model where the advertiser pays each time someone clicks on their ad, rather than when it is displayed. The price of each click is set by a real-time auction, influenced by competition, the quality of the ad and the relevance of the landing page. The acronym names a billing model, not a platform.
Where you pay per click
Pay-per-click is the rule on search engines: Google Ads and Microsoft Advertising charge for a search ad when someone clicks on it. Showing the ad costs nothing.
On LinkedIn and Meta, the click is one of the billing options. Depending on the campaign objective, the advertiser can also pay per impression (CPM, a price per thousand impressions). PPC therefore covers part of paid social, whereas SEA stops at search engines. Many businesses simply say “Google advertising” instead of PPC.
How the price of a click is set
Each search or each ad display triggers an auction between eligible advertisers. The amount the advertiser is willing to pay is not the only criterion: on Google Ads, the quality of the ad and of the page it leads to also count (that is Quality Score). At an equal bid, a more relevant ad can therefore win a better position and pay less for its click. The amount actually paid then shows up in the account: that is the CPC (cost per click).
Average CPC = total cost of clicks ÷ number of clicks
CPC tells you what a visit cost. It says nothing about what it brought in: for that, you need to follow cost per acquisition (CPA) through to the sale.
A business spends $1,500 in a month on Google Ads and gets 500 clicks: its average CPC is $3. Twenty of those visits become leads, so each lead cost $75. Five leads become sales, so each sale cost $300.
That last number is the one to compare with the margin on a sale.
We read PPC as a billing model, not as a performance indicator. Cost per click is the most watched number in an account and the least decisive: it can rise while profitability improves, if the clicks you buy lead to more sales. A $2 click that never converts costs more than a $12 click that leads to a sale.
The number that decides is cost per acquisition, compared with the margin a customer is actually worth to your business. Paying per click also means visits stop the day the budget stops. The link between the enquiry received and the closed sale then becomes the foundation for everything else.
Not to be confused with
- SEA
- SEA names a surface (advertising on search engines), whereas PPC names a billing model. A Google Ads search ad is both; a LinkedIn ad billed per click is PPC without being SEA.
- CPC
- CPC is the price paid for one click. PPC is the rule that makes you pay per click: one is a number, the other a model.
Related concepts
Further reading
- Google Ads: structure, exclude, measure
- Google Ads ROI: from the reported ROAS to real profit
- SEO and SEM: the second contains the first, not the other way around
- Social media advertising: choose, concentrate, measure
Related services
Frequently asked questions
Do I pay if nobody clicks on my ad?
Not on a campaign billed per click: showing the ad costs nothing and only the click is charged. A campaign billed per impression (CPM) works the other way around.
Is PPC the same thing as Google Ads?
Not quite. Google Ads is a platform that mostly bills per click. PPC is the billing model itself, which Microsoft Advertising, LinkedIn and Meta also offer.
