Your Guide to Understanding Pay Per Click Models of Advertising

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Digital media accounts for more than 40 percent of all ad spending around the world. Companies are spending billions of dollars on ads on social media, websites, and more.

One of the most popular types of ads to buy is the pay-per-click model. Often referred to as PPC, this model is used by Facebook, Google, and even Amazon.

If you’re new to the world of online advertising, PPC may seem a little intimidating. We put this guide together to help you understand the different pay per click models and ad networks. With a better understanding, you can choose the right partner for your advertising.

The Fundamentals of All Click Models

No matter which click model is in use, there are some fundamental principles to PPC ads. The idea is always that you pay per click.

This is much different than print media. With print media, you might pay by the size of the ad, or by how many copies your ad would appear in.

For TV and radio, you’d pay for seconds of airtime. Some networks would also charge based on how many people will tune in. The more popular a network or program, the higher the price you’d pay.

Some digital advertisers have used similar models to structure their ad pricing. You may pay a flat rate for a banner ad or a pop-up ad. On YouTube, you might pay for a 10-second ad or a 25-second ad to play before a video.

You might also pay per impression, which is a measure of how many times your ad is served. Each time your ad appears on a page, it counts as a new impression.

PPC is different, in that you only pay when the user interacts with the ad by clicking on it.

Keyword Bidding and Paid Search

Most PPC ad networks don’t have set prices. Instead, they allow advertisers to bid on keywords. The winning bid gets the ad placement.

When someone clicks on the ad, the advertiser pays the bid. You pay the bid price for each click.

This model works for Google and platforms with a search function like Facebook. Users punch in keywords, and the ad network then matches the query to exact or similar keywords. The ad is then displayed to the user along with their search results.

Amazon recently introduced PPC advertising on their site, although it’s a little different. You still bid on keywords and pay when someone clicks the ad, but Amazon has some more controls on the ads. They also offer more advertising slots.

Display Advertising

Another form of PPC is known as display advertising. This type of ad crops up on social media, in video games, and in other types of digital media.

It’s different from its paid search cousin because the user isn’t searching for anything. Instead, the advertising platform uses demographic information to serve ads to viewers. It uses posts, interactions, and likes to determine what ads are relevant for a user.

This model is still considered pay-per-click. You only pay when someone clicks the ad.

Google’s Display Network optimizes display ads on millions of partner websites. The network uses an algorithm to determine what ads to serve on a particular site.

Like search, it uses a complex mix of factors to determine which ads are displayed. As the advertiser, you’ll enter a maximum bid for the click. You can target factors such as geographic location, schedule, and the user’s device.

Google then weighs that information against the relevance and quality of your ad. Your bid is also included in the mix. If you “win” the auction, your ad will be displayed.

Most platforms, including Facebook, allow you to set a daily budget as well. Once you’ve used up your budget through clicks, the network stops displaying the ad.


The final PPC click model is as remarketing. Remarketing can be done as display ads or paid search. The difference is that it takes into account extra information about the user.

Remarketing serves your ads to people who have already clicked on an ad of yours. Maybe they visited your homepage or checked out your blog.

Remarketing ups the ante by giving these interested parties more incentive. Maybe you offer them a discount coupon or a free ad on if they buy something from you. You could offer them a free download or entry into a contest.

Remarketing helps to capture leads who already expressed their interest in your business. The next challenge is to get them to contact you or sign up.

Both paid search and display ads offer remarketing options for advertisers.

Flat-Rate PPC

Most PPC models use a bidding system, which means the price of a click can change. If you operate in an industry where customer loyalty is high, bids are likely to be higher.

Some sites have adopted flat-rate PPC. With this model, you pay a fixed rate. This is particularly common among comparison shopping sites.

If a site uses flat-rate PPC, you can usually find a published rate card.

Running Successful PPC Campaigns

No matter which click model you’re using, bidding on the right keywords and creating a budget are essential for PPC success. You should also have a good understanding of your audience.

Creating high-quality ads with good copy is also important. Be sure to test variants of your ads with different segments of your audience. This is especially important for remarketing.

Finally, you should be aware of click fraud and some of the common mistakes advertisers make with PPC ads.

Get a Helping Hand with PPC

Understanding how PPC click models work is one thing. Using that knowledge to run successful PPC campaigns is another.

If you’re feeling a bit overwhelmed by running a PPC campaign, get in touch with us. We have the expertise and experience to simplify PPC. It’s easy to propel your business to PPC success when you have the right help.

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