What Is PPC Advertising? How It Works and How It Differs from Other Ads

One of the basic concepts in digital advertising is the charging method called PPC advertising. This article clearly organizes what PPC advertising is, and explains the mechanism, the representative types, the difference from other ads, and the merits and demerits, in a way that is easy for beginners to understand.

What is PPC advertising?

PPC advertising (Pay Per Click) refers to a click-based charging model of advertising in which a cost is incurred according to the number of times the ad is clicked. Because no cost is incurred merely from being displayed, and you are charged only when a user actually clicks, its feature is that you can spend money only on people who showed interest.

The relationship with listing ads

In Japan, search-linked "listing ads (search ads)" are sometimes called PPC advertising, but strictly speaking PPC is a word that refers to the charging method of click-based charging. Both listing ads and part of display ads are provided under this click-based charging mechanism.

The mechanism of PPC advertising

The basic mechanism of PPC advertising is as follows.

1. Set keywords and targets: decide for which searches and which segments the ad will be shown.
2. Placement is decided by bidding: ad slots are in an auction format, and the placement rank is decided according to the bid amount and the quality of the ad.
3. You are charged on click: even when the ad is displayed you are not charged; the cost is incurred only when it is clicked.
4. Improve based on data: while watching the click rate and conversions, improve the keywords and ad copy.

Representative types of PPC advertising

• Listing ads (search ads): ads displayed in conjunction with search engine results. They reach users whose needs have surfaced.
• Display ads: ads displayed in the ad slots of websites and apps, some of which are provided on a click-based charging basis.
• Social media ads: ads displayed in social media feeds and the like, where click-based charging can sometimes be selected.

The difference between PPC advertising and other ads

PPC advertising is distinguished from other ads in terms of the charging method.

• Click-based charging (PPC): charged according to the number of clicks. Because you pay for the behavior of people who showed interest, its feature is that there is little waste.
• Impression-based charging (CPM): charged according to the number of ad impressions (per 1,000). It is suited to expanding awareness.
• Performance-based (affiliate): charged according to results such as purchases or registrations. You are not charged for clicks alone.

In other words, PPC advertising has the feature of being charged based on clicks rather than on impressions or results.

Merits and demerits of PPC advertising

• Merits: you can spend narrowed down to people who showed interest, start from a small amount, and easily measure the effect with data.
• Demerits: for popular keywords the cost per click tends to rise due to bidding competition, and operation and improvement also take effort.

Summary

PPC advertising (Pay Per Click) is a click-based charging model of advertising in which a cost is incurred according to the number of times the ad is clicked. Listing ads and display ads are provided under this mechanism, and it differs in charging method from CPM, which is charged by the number of impressions, and affiliate, which is charged by results. Its strength is that you can spend narrowed down to the behavior of people who showed interest, and improve while measuring the effect. Start by confirming whether it is a charging method that fits your own purpose.