How does PPC advertising work?
PPC can work in several different ways, depending on your ad network and ad type. For example, although similar, Google Ads and Microsoft Advertising use different algorithms for their ad auctions.
When discussing how PPC advertising works, many refer to Google's process. So, if you're advertising on Google, you can expect the following:
- A user searches on a search engine such as Google
- Google launches an ad auction, collecting all relevant ads and their Quality Scores
- The auction considers the bid, quality, and potential impact of each ad for assigning an ad rank
- Google delivers ads in order from highest to lowest ad rank
During an ad auction, Google also calculates your cost-per-click using the following formula:
CPC = Ad Rank below you / Your Quality Score + $ 0.01
This formula is the reason why PPC consultants, as well as agencies, focus on creating high quality. If you create a useful ad, you can achieve a better Quality Score, which can lead to lower costs and improved ad rank.