What is PPC? The Ultimate Guide

Pay-per-click (PPC) is one of the most effective ways to promote your business online, attract high-intent traffic and generate measurable results. However, PPC has changed a lot in the past few years. Today’s campaigns rely more heavily on automation, stronger tracking, better landing page experiences and clearer audience signals than they did when this guide was first published.
In this guide, we will cover:

• What is pay-per-click?
• PPC terms you’ll want to know
• How does PPC work?
• The main types of PPC advertising
• Advantages and disadvantages of pay-per-click advertising
• Differences between PPC and SEM
• How to get started with PPC
• Performance Max, Smart Bidding and AI in PPC
• Consent Mode v2, first-party data and attribution

What is pay-per-click?

PPC (pay-per-click) is an advertising model where you pay when someone clicks on your ad. It is most closely associated with search engines such as Google and Microsoft Advertising, but it also includes other ad formats that can be bought or optimised on a cost-per-click basis.

For this guide, the focus is on advertising formats that are genuinely pay-per-click, or closely tied to PPC campaign management in platforms such as Google Ads and Microsoft Advertising. That means the emphasis is on Search, Display, Shopping and related campaign types, rather than paid social.

Types of PPC

• Paid search advertising: text-led ads that appear on search engine results pages when users search for relevant terms.
• Display advertising: image or responsive ads shown across websites, apps and other placements, often used for awareness or remarketing.
• Shopping advertising: product-led ads that show images, prices and retailer information directly in search results.
• Microsoft search advertising: paid search campaigns running across Bing and Microsoft-owned placements.

Video advertising can sometimes sit alongside PPC campaigns, particularly within Google Ads, but many video formats are charged on a cost-per-view or cost-per-thousand-impressions basis rather than true PPC.

If you’re also interested in learning more about paid social advertising across platforms such as Meta, LinkedIn and TikTok, take a look at our guide to social media advertising.

PPC terms you’ll want to know

Search Engine Marketing (SEM)
A broad term covering marketing activity designed to increase visibility in search engines. In modern usage, many marketers use SEM to mean paid search specifically, but the term is still often used more broadly.

Keywords
The words or phrases advertisers target so their ads can appear when users search for relevant topics.

Click-through rate (CTR)
the percentage of impressions that result in a click. Higher CTR often indicates stronger relevance between the query, the ad and the offer.

Quality Score
Google Ads’ diagnostic score, measured from 1 to 10, based on expected click-through rate, ad relevance and landing page experience.

Ad Rank
The value used to determine whether your ad shows and where it appears. It’s not just a simple formula; Google looks at your bid (the most you’re willing to pay per click), how relevant and useful your ad and landing page are (Quality Score), and the expected impact of your ad assets, plus real time signals like the user’s location and device.

Cost per click (CPC)
The amount paid when someone clicks on your ad. If you’re interested in learning about what the average cost per click is for businesses that fall within your industry, then check out our free 2026 Paid Search Benchmark Report here.

Search volume
How often a keyword is searched for in a given period. In PPC, it helps advertisers assess demand and forecast traffic potential.

Match types
Match types are settings that control how loosely or tightly your keywords can match what someone actually types into Google. Broad, phrase and exact are still the three main options, but they now focus more on the overall meaning of the search than the exact words. This means your ad can still show for related searches, not just the exact phrase you added.

Ad groups
Collections of ads and keywords grouped by a common theme inside a campaign.

Landing page
The page a user arrives on after clicking an ad.

Responsive Search Ads (RSAs)
the default text ad format for Google Search campaigns. Advertisers can supply up to 15 headlines and 4 descriptions, and Google tests combinations automatically.

Performance Max (PMax)
A goal-based Google Ads campaign type that can serve across Search, YouTube, Display, Discover, Gmail and Maps from one campaign.

Smart Bidding
Google’s automated bidding system, including strategies such as Maximise Conversions, Maximise Conversion Value, Target CPA and Target ROAS.

Ad assets
Additional ad elements such as sitelinks, callouts, structured snippets, call assets and location assets that can improve visibility and click-through rate. These used to be called ad extensions.

ROAS (return on ad spend)
The revenue generated for every pound spent on advertising.

First-party data
Information you collect directly from your own audience, such as CRM records, website leads and consented customer data.

Consent Mode v2
Google’s framework for managing ad and analytics signals based on user consent, now a key requirement for advertisers targeting users in the UK and EEA.

How does PPC work?

PPC works by allowing advertisers to bid to show ads for specific searches, audiences or placements. When a suitable search or impression opportunity appears, an automated auction decides whether an ad is shown and in what order.

The result of the auction isn’t decided by your bid alone. Google also looks at how likely people are to click your ad, how relevant your ad text is to the search, how good the landing page experience is, and how helpful your other ad assets (like sitelinks and callouts) are. All this combined then decides whether your ad shows and in what position.

This means that you’ll need to go beyond choosing your keywords and setting bids. You also need accurate conversion tracking, relevant creatives, high-quality landing pages and a sensible automation strategy.

The main types of PPC advertising

Search ads

Search ads are the most recognisable form of PPC. They appear when someone searches for a product, service or question in a search engine, making them highly intent-led.

Search campaigns are often best for:

• Lead generation
• High-intent service enquiries
• Ecommerce searches with strong purchase intent
• Capturing demand that already exists

Search ads remain the core of many PPC strategies because they target people who are already looking for something specific.

Display ads

Display ads are visual ads that appear across websites, apps and other placements. They are often used for brand awareness, remarketing and staying visible to users after they have already visited your site.

Unlike search ads, display advertising is not usually triggered by an active search. Instead, it is more interruption-based, which means creative quality, audience targeting and frequency control matter much more.

Display advertising can still sit within a PPC strategy, especially when campaigns are bought on a cost-per-click basis or used to support remarketing alongside search.

Shopping ads

Shopping ads are designed for ecommerce businesses. They typically show a product image, title, price, retailer name and other product information directly in search results.

Because they are so product-focused and close to the point of purchase, Shopping ads can be especially effective for retailers with strong product feeds and competitive pricing. Shopping campaigns depend heavily on feed quality, product titles, pricing and availability, so optimisation is not just about keywords, it is also about the strength of your product data.

Microsoft Advertising

Microsoft Advertising is the current name for the platform formerly known as Bing Ads. It allows businesses to run search and shopping campaigns across Bing and Microsoft-owned partner placements.

Although Google still dominates search, Bing’s UK search share is around 4 percent, and Microsoft Advertising can still be very helpful for businesses, as average CPCs are often lower and the platform offers useful B2B targeting via LinkedIn profile data.

Advantages and disadvantages of pay-per-click advertising

There are many benefits to PPC, but it also comes with trade-offs. The strongest campaigns combine relevant targeting, strong creative, accurate measurement and continuous optimisation.

Advantages of PPC advertising

Increase brand awareness and website traffic
 PPC can place your brand in front of relevant users across search results, websites, apps and shopping environments.

Generate qualified leads and interested prospects
Because many PPC formats are built around intent, product relevance or remarketing, they can be highly effective for driving commercial actions.

Target local, national or global audiences
Location targeting, scheduling and audience signals allow advertisers to control where and when ads appear.

Deliver measurable results
PPC gives advertisers access to campaign-level and keyword-level data, making it easier to monitor performance and optimise spend.

Support flexible budget control
Budgets, bids and campaign settings can be adjusted based on performance and business priorities.

Works well with automation when measurement is strong
Modern PPC platforms use machine learning to optimise bids, placements and creative combinations, which can improve efficiency when conversion tracking is reliable.

Disadvantages of PPC advertising

PPC can be a risk
Clicks do not guarantee leads or sales, and poor setup can waste budget quickly. This is particularly true when it comes to display and remarketing campaigns, where low relevance or overexposure can drive up spend without improving results.

Campaigns need active management
PPC requires ongoing optimisation of keywords, audiences, feeds, creative, landing pages and bidding strategy. Some sectors are highly competitive Industries with strong commercial intent often face high CPCs and aggressive competition.

Visibility ends when spend stops
Unlike organic visibility, paid traffic usually drops as soon as campaigns are paused.

Measurement is more complex than it used to be
Consent requirements, signal loss and platform automation mean advertisers need stronger tracking setups and cleaner data than they did a few years ago.

Differences between PPC and SEM

The terms SEM and PPC are often used interchangeably, but they are not always identical.

• SEM refers to search engine marketing.
• PPC refers to the pay-per-click pricing model used in search and related ad formats.
• SEO refers to organic optimisation for unpaid search visibility.

In practice, many marketers now use SEM as shorthand for paid search specifically, even though the wider definition can include both paid and organic activity.

How to get started with PPC: 8 steps to successfully launch a PPC campaign

Before launching a campaign, define your goal, choose the right format, make sure tracking is set up correctly and be clear about how success will be measured.

Not every PPC format works the same way. Search campaigns are driven mainly by keywords and intent, while display and shopping campaigns rely more heavily on audience targeting, product feeds and creative quality.

1. Set a goal for your PPC campaign

Every campaign needs a clear objective so performance can be measured properly. Your goal might be generating leads, increasing ecommerce sales, driving phone calls or boosting website traffic.

Choose a primary conversion before launch and make sure it is tracked correctly, because bidding automation depends on reliable conversion signals.

2. Analyse keywords or product intent

For search campaigns, keyword research helps identify the searches most likely to lead to clicks, leads or sales. Focus on commercial intent, relevance and likely conversion value rather than search volume alone.

For shopping campaigns, the focus shifts slightly towards product titles, feed structure and product data quality. For display campaigns, audience intent and placement relevance matter more than keywords.

3. Choose your targeting approach

The way you target users will depend on the campaign type.

• Search campaigns use keywords and match types.
• Shopping campaigns rely on your product feed and campaign structure.
• Display campaigns often use audience segments, placements and remarketing lists.

If you are running a search campaign, match types still matter. Broad, phrase and exact are the three main options, but they now rely more heavily on meaning and intent than exact wording.

Before launch, build a negative keyword list for search campaigns to reduce wasted spend and improve relevance.

4. Create your ads

Once your goal and targeting are clear, you can begin building your ads.

For Google Search, the standard text ad format is now the Responsive Search Ad (RSA)

Responsive Search Ads include:

• Up to 15 headlines, each up to 30 characters
• Up to 4 descriptions, each up to 90 characters

Google automatically tests combinations of headlines and descriptions to find what works best.

If you’re running display campaigns, then consider the creative to be just as important as targeting. You’ll need strong imagery, clear messaging and a clear call to action. Approach your creative with a ‘less is more’ approach, avoid using lots of text and multiple messages in one ad, focus on one clear message and CTA.

For shopping campaigns, the quality of your product feed is a major part of ad performance.

5. Focus on the language and creative of your PPC ads

As mentioned above, your ad copy needs to be clear, relevant, persuasive and easy to scan.

Useful principles include:

• Speak directly to your audience
• Highlight a clear value proposition
• Match the intent behind the search or audience
• Use a clear call to action
• Keep the ad message aligned with the landing page.

You should also add ad assets wherever relevant, such as sitelinks, callouts, structured snippets, call assets and location assets. These can improve visibility and give users more reasons to click.

6. Structure your campaign carefully

Good campaign structure makes optimisation easier and helps control spend.

Search campaigns should usually be grouped around clear themes, services or product categories.

Shopping campaigns need sensible product segmentation and strong feed management.

Display campaigns need thoughtful audience groupings and creative variations.

Performance Max adds another layer here, because it uses asset groups rather than traditional search ad groups.

7. Optimise for mobile and landing page experience

Mobile users often behave differently from desktop users, so it is important to check performance by device and adapt accordingly.

That can include:

• Faster landing pages
• Shorter forms
• Click-to-call functionality
• Clear mobile-first messaging
• Good product page experiences for shopping traffic

8. Be strategic with budget and bidding

PPC campaigns can become expensive if they are not set up correctly. Budgeting should reflect your goals, margins and likely conversion values.
Modern bidding strategies include Manual CPC, Maximise Clicks, Maximise Conversions, Target CPA, Maximise Conversion Value and Target ROAS.

Automated bidding works best when conversion tracking is accurate and there is enough data for the platform to learn. Changing strategy too often can trigger a learning period and reduce stability.

Performance Max, Smart Bidding and AI in PPC

Google Ads has shifted heavily towards automation, and any up-to-date PPC strategy needs to reflect that. Performance Max is now a major campaign type, while Smart Bidding underpins much of Google Ads optimisation.

Performance Max 

Performance Max gives advertisers access to Search, Display, YouTube, Discover, Gmail and Maps from one goal-based campaign. It works best when there are enough conversion signals, strong creative assets and a clear business objective.

The trade-off is that Performance Max offers less transparency and less manual control than a standard Search campaign, so it should be used strategically rather than treated as a default for every account.

Smart Bidding

Smart Bidding uses machine learning to optimise bids based on the likelihood of a conversion or conversion value. It can be highly effective, but only when the account has reliable tracking, sensible campaign goals and enough conversion volume.

AI in PPC

Google introduced AI Max for Search campaigns in 2025, expanding automated query matching, creative generation and optimisation within Search campaigns. Google reports that advertisers who activate AI Max typically see 14% more conversions or conversion value at a similar CPA or ROAS.

Ads are also now appearing within Google’s AI Overviews and other AI-led search experiences. This means PPC strategy is becoming more closely tied to automation, broad matching and creative adaptability.

Consent Mode v2, first-party data and attribution

For UK advertisers, Consent Mode v2 is now a major part of PPC measurement and compliance. Remarketing, audience creation and conversion tracking can be disrupted if it is not implemented correctly. Enhanced conversions can help improve measurement quality by securely using consented first-party data to recover conversion visibility where signal loss exists.

As privacy restrictions increase, first-party data has become more valuable in PPC. CRM records, lead form data, Customer Match lists and other owned data sources can strengthen audience targeting, reporting and bidding performance.

This has made attribution more important than ever. Attribution helps businesses understand which touchpoints contributed to a conversion. Most advertisers now use data-driven attribution, which gives a broader view of how campaigns contribute across the customer journey than simple last-click reporting.

Final thoughts

PPC remains one of the most effective digital marketing channels for businesses. The biggest difference in 2026 is that success depends less on manual bid management alone and more on strong measurement, smarter automation, better creative assets, cleaner product data and a privacy-aware data strategy.

Getting all of that right takes time, expertise and the right tools. If you’d like support building or improving your PPC campaigns, then our team at LOCALiQ can help. Get in touch today to find out how we work with businesses across the UK to drive better results from paid advertising.