Google Pay-per-Click Ads Explained (2025)

Google pay-per-click (PPC) ads are campaigns marketed on Google via Google Ads. Since Google is the most widely used search engine today, the main goal of these ads is to get more people to view your website and interact with it, ultimately increasing profit.

According to Google, a business can make $2 on average for every $1 spent on their pay-per-click (PPC) ads. However, this type of advertising requires some knowledge before you dive in. In this guide, we’ll cover everything about Google pay-per-click ads — from how they work to the best strategies and more.

What Are Google Pay-per-Click Ads?

Google pay-per-click (PPC) advertising is an online advertising model where the search engine charges you a fee for every click your ad receives. It is enabled through the Google Ads platform (previously known as AdWords), which allows your PPC campaigns to appear in different places across the web, such as on Google search or anywhere on the Google Display Network.

How Do Google PPC Ads Work?

To fully understand Google pay-per-click advertising, we must go over how the whole process works. There are four steps:

1. Google Search
2. Google Auction
3. Ad Ranking
4. Clicks on the Ad

1. Google Search

The process begins the second someone searches on Google, i.e., when someone searches for a keyword in the search engine. This signals Google that there’s demand, so it commences the auction and ranks the eligible ads — ads from advertisers who are willing to bid on that keyword.

2.Google Auction

The Google Ads platform works on a bidding model, wherein the auction revolves around keywords. This is why you must first conduct extensive keyword research to know which keyword you want to rank for on Google.

Google gathers all advertisers for that one keyword (or more) and lets them offer an amount they’re willing to pay for each click. The one with the highest amount gets the chance to be ranked among the first few results on Google.

3.Ad Ranking

The next step is done between the moment a user searches on Google and the results appear. In these few seconds, Google’s algorithm wraps up the auction and starts ranking based on 6 factors:

• Bidding Amount: This is how much you’re willing to pay for every click on the ad a.k.a. the cost-per-click (CPC).
• Ad Quality: How useful your ad is to customers searching for a similar product/service.
• Ad Assets: The extra info you add to your ad such as phone number, website link, etc.
• Ad Rank Thresholds: Minimum quality limits an ad must comply.
• Ad Context: How your ad matches the user’s search intent based on several settings like location, type of device being used for the search, etc.
• Ad Competition: How many other advertisers are competing for the same position.

To be more exact, Google determines an Ad Rank score that’s essentially the combination of your maximum CPC bid and the Quality Score that ranks between 1 and 10. The latter constitutes the other 5 factors aside from the bidding amount.

The precise formula for calculating the Ad Rank is:

Maximum CPC bid x Quality Score

In the Google Auction, the one that has the highest Ad Rank gets the first few Google spots.

For example, if your maximum bid is $10 and the overall Quality Score is 8, then your rank will be 80. But if someone has a lower Quality Score of, say 7, and yet their maximum bid is $12, then they get an Ad Rank of 84, automatically getting a better ad placement.

4.Clicks on the Ad

Finally, the ad is placed on the SERP, and users get to see it. The more times they click on it, the more you pay. Of course, you can also set a budget, which tells Google Ads that they can run the ad until that limit has been reached.

How Much Does Google Ads Cost?

How much you’d pay for your Google ad depends on several factors:

• Industry – Ads in certain industries cost way more than in others. For instance, legal and financial ads may cost more than wellness or hairdressing ads.
• Quality Score – Your Quality Score doesn’t just affect your Ad Rank, but it also influences how much you’ll pay for the ad. A higher Quality Score allows you to bid less and still rank on Google. Vice versa, if you have a low Quality Score (anything between 1-3), then you’d have to increase your CPC bid, thus influencing the overall ad cost.
• Keywords – Some keywords are more competitive than others, meaning you’d have to pay more for them. Paying more for a keyword directly influences your bid and the ad cost.
• CPC bid – The amount you bid for the ad is how much you’re going to pay each time someone clicks on the ad. So, the higher it is, the higher the ad cost.
• Trends – Overall trends also influence the price of your ad. Consumer trends are changing constantly so your ad may not reach many people one day and skyrocket the next.

Here are two examples so you better understand how these factors can influence the price:

1. Say you’re placing an ad in the B2B industry on the Google Display Network. The average CPC is $0.79. Using Ahrefs’ free keyword generator, you can find the best keywords for your topic. If you rank for a keyword that has high difficulty levels like “B2B business”, you will have to pay more for your CPC bid to get the ad ranking. That can even amount to spending $50 for a click. But if you use “B2B business development” you can get a lower CPC bid, thus paying something around $5 for the ad.

2. If we take the hospitality industry, your ads are likely to cost less than the example above. The average CPC on the Google Display Network is $0.44 which automatically lowers your costs. Now, using an easy ranking keyword like “travel and hospitality jobs” you can get a higher placement on Google with as much as $1-$2 per click.

As you can see from the examples, different factors can yield different results. However, in general, the average CPC on Google Search Network is around $2, while on the Google Display Network, it’s typically $1.

Note: This isn’t carved in stone and should be taken with a grain of salt. Some big companies spend over $50 million in a year, while small businesses can pay thousands to get their ads ranked.

Google Pay-per-Click Ads Search and Display Networks

As mentioned above, Google pay-per-click advertising can be done via two channels, i.e., your Google PPC ads can be distributed and shown through the:

• Google Display Network
• Google Search Network

The main difference between the two is that ads on Google Search Network only show up on search sites, while those on Google Display Network can be shown on different websites across the Internet. Let’s learn more about each one in detail.

Google Display Network

The Google Display Network is a group of over 2 million websites, videos, and apps where your Google PPC ads can show. Through the Google Display Network, your brand can reach audiences based on location, context, demographics, etc. Plus, the ads can appear in multiple formats and on different devices.

Google Display Network Ads Locations

Some sites that are part of the Google Display Network and where your ads may show include:

• Google
• Gmail
• YouTube
• Affiliate websites
• Mobile apps

Google Display Network Ad Types

As for the type of your Google PPC ads, they can be:

• Animated graphics
• Static images
• YouTube videos
• Optimized ad copy and logos

Benefits of Google Display Network

Considering the magnitude of Google Display Network, there are plenty of benefits we can talk about. In the following text, we’ll share the main advantages.

Brand Awareness

Google Display ads are great for targeting consumers at the top of the sales funnel — the awareness stage. At this stage, consumers aren’t actively searching for a product or service, meaning they don’t have the intent to buy yet. That’s where Google Display Network enters the stage — it puts your brand in front of your target audience.

Instead of adding just small lines of text like in Google Search, with Google Display Network you can incorporate various aspects of your brand, such as logos and images. This leaves a more impactful impression on consumers about what your brand is about, making Google Display ads a great option for new brands.

Remarketing

The Google Display Network is a good choice for businesses that want to remarket or retarget their ads. The process takes a user’s search history and displays ads from companies they’ve had previous interactions with or products they’ve previously searched for. This way, companies increase the CTR on their display ads and effectively retain consumers.

Google Search Network

The Google Search Network is a group of search sites and apps where your Google ads can be displayed. With Google Search, your enterprise can target potential customers while they search and browse Google and non-Google websites (also called search partners).

Google Search Network Ads Locations

Aside from Google as a search engine, your Google pay-per-click advertising can also appear on sites where users look for information, such as:

• Google Maps
• Google Video
• Google Images
• Google Shopping
• Google Play
• YouTube
• Etc.

Google Search Network Ad Types

Just like in Google Display Network, you can show your ad content in different ways here as well. Those ad types include:

• Basic text ads featuring the URL, a headline, and a site description
• Dynamic search ads using your website content to reach people performing searches
• Call-only ads directing calls to your business contact instead of rerouting the click to your business page
• Shopping ads endorsing your eCommerce site and online inventory to shoppers

Benefits of Google Search Network

Implementing PPC on Google Search also comes with several benefits, such as:

Quick Conversions

When it comes to Google pay-per-click advertising, search ads are perfect for buyers that are deeper into the sales funnel, particularly those who already have the intent to purchase. Since they’re already actively searching for relevant products and services, they’re more likely to buy.

For example, if you’re a dentist, you can run Google paid search ads so that when someone searches for a dentist nearby for their toothache, yours is the establishment they’re going to primarily see.

Cost-Effective Option

If you have a somewhat limited marketing budget, starting off with search ads is a brilliant idea. Because of higher conversions, you’re more likely to yield results and get a return on your investment.

5 Google Pay-per-Click Advertising Strategies

Different Google Ads agencies use different strategies to optimize a business’ Google Ads PPC campaign. Some of them you can use include:

1. Target the Right Audience
2. Allocate Your Budget Correctly
3. Create Effective Ad Copy and Images
4. Track Your Google Pay-per-Click Ad Performance
5. Modify Campaign as Needed

1. Target the Right Audience

Identify and set the attribute of your target market. If you use local targeting, specify the area where your prospective customers reside. You can also use the local language to narrow down your potential clients.

Other qualities you can assign to your target audiences are:

• Interests
• Recent website visitors
• Search queries related to your business

2. Allocate Your Budget Correctly

Ensure you do not spend more than your bottom line allows. Neither should you overspend on clicks from people outside your target market.

Google pay-per-click ads offer two ways you can set a budget:

• Daily budgeting lets you set a limit to your everyday ad spending.
• Total budget setting allows you to regulate how much you intend to spend on an advertisement throughout its campaign life cycle.

3. Create Effective Ad Copy and Images

Incorporate relevant targeted keywords into your well-formulated Google PPC ads text. This will help you reach people who are interested in your offers. Also, it will keep you from being labeled as spam.

Don’t forget to use strong call-to-action (CTA) phrases, like “Get free trial!” This will encourage prospective clients to find out more about your brand.

4. Track Your Google Pay-per-Click Ad Performance

Regularly monitor your Google pay-per-click ad performance via your account to check if you are meeting your goals. This involves keyword reporting and conversion tracking. Both can assist you with assessing which areas of the Google PPC campaign are working and which ones need improvement.

5. Modify Campaign as Needed

Changing your Google pay-per-click advertising campaign when necessary is a vital aspect of managing it effectively. You should constantly adjust your targeting and setting to ensure you are getting results.

Tracking Google Pay-per-Click Ads

PPC conversion tracking is a vital part in your Google pay-per-click campaign. It lets you know which advertisements drive the most conversions, so you can adjust your keyword choices, bidding, and budget to optimize those effective campaigns. You can also apply the effective tactics of your successful Google PPC ads to the ones that require adjustment.

Keeping tabs on all completed conversions assigned to your Google Ads account, PPC tracking empowers you to trim ad expenses while maximizing profits. But how can you track your Google PPC ads? Simple; there are five things you should set up and monitor on your account:

• Website actions include a button click, form-fill, adding to cart, email subscription signup, and purchase.
• Phone actions are conversion actions that originate from your ads and are taken on a mobile device. This is critical because 95% of ad clicks are made on smartphones.
• Application installations and in-app conversions only apply to brands with PPC ads on app, app downloads and other interactions.
• Imported conversions are tracked actions that happen offline, such as a successful phone sale or an in-person action.
• Local conversions or actions related to your business’s physical location refer to interactions like getting directions or viewing a menu.

Benefits of Pay-per-Click Advertising on Google

Google has a massive reach and dominates the search market, meaning users can get plenty of benefits from using Google pay-per-click ads. These include:

• Advanced Targeting Technology
• Cost-Effectiveness
• Maximum Utilization of SEO
• Full Control Over Ad Campaigns

1.Advanced Targeting Technology

With PPC on Google, you can reach audiences easily based on specific interests and demographics, such as location, habits, hobbies, and parental status. You can also choose where to set up your ad and in what form (on YouTube as a video or a simple text on Google Search) so it fits with your target audience.

2.Cost-Effectiveness

Google pay-per-click advertising is an excellent opportunity to harness an impressive return on investment (ROI) at costs within your means. Not only can you set up a budget for the campaign, but you can also choose your bidding amount to be based on keywords that don’t have high competition, meaning you’ll get a lower CPC.

3.Maximum Utilization of SEO

Search engine optimization (SEO) is a valuable companion to Google pay-per-click ads because:

• You can use your PPC reporting data for your SEO tactics.
• SEO can help decrease your PPC expenses by performing well on the organic search results page.
• It boosts your online visibility as your business website and other information will appear on both organic and paid search results.

4.Full Control Over Ad Campaigns

Google Ads pay-per-click program enables you to decide your daily and monthly spending based on performance analytics and insights. This means you can maintain complete, thorough control over your campaigns and budget.

Invest more in ads that are performing well and increase the expected results. In contrast, you can lower the ad spend on underperforming advertisements and stop running them entirely to avoid bigger losses.

How To Know if PPC Google Ads Are Right for Your Business?

Although there are many benefits to using Google Ads PPC advertising, how do you know if it's the best choice for your business? Here are some things to consider.

Marketing Budget

As briefly mentioned above, the amount you pay per click is one of the factors influencing your Google Ads ranking. But the bid itself mainly depends on the industry your business is in and the search volume of the keywords you pick.

You can analyze the average CPC in your industry and compare that with the average conversion rates to see if it’s even worth investing your time and money to do pay-per-click Google Ads. Doing this will also give you a broad idea of how much it’ll cost you to gain one customer.

This way, you can check with your marketing budget if you can afford the costs. However, you should also take into account that bringing in one customer doesn’t mean they’ll only do business with you once. They could be a loyal customer that conducts multiple transactions per month or year.

Time Constraints

After checking your marketing budget and the average cost to expect, the next thing you need to consider is if you have the time to manage your Google pay-per-click ads. If you don’t have the bandwidth to take on this task, do you at least have employees who can do it for you? Alternatively, can you outsource this task to a digital marketer for an affordable rate?

Google pay-per-click advertising delivers fast results. However, that’s not to say that it’s not time-consuming. You may need to dedicate a few hours per week to managing and maintaining these ads. You need to create new ads, adjust your allocated budget, test new designs, look for new keywords, and more.

Product or Service Offering

With various types of online advertising, you have to determine if your product or service will do well in Google Ads. For example, you already know product images aren’t shown in search results. So, if you need to show diverse product images for your product to sell well, your product may not do well on Google Ads. In that case, perhaps Instagram is an alternative platform you can consider.

Traffic Potential

Keyword research is an essential step in setting up pay-per-click Google Ads. You first need to see how many internet users are searching for the product or service you’re offering. If there are not enough people searching for the keyword/s you want to target, it may not be worth it.

To do keyword research, you can use tools like Ahrefs to check if relevant keywords have enough search volume. This metric is the estimated number of times a particular keyword is searched by users each month. Look for relevant keywords that have a search volume of at least a few hundred.

PPC vs SEO vs CPC Comparison

Building a strong digital marketing strategy is crucial for high conversion rates and fast revenue. While doing it, you may have come across different terms that intertwine with each other. Such is the case with PPC, CPC, and SEO. Luckily, we’re here to make things a bit clearer:

• PPC (pay-per-click): As mentioned throughout this article, PPC refers to paying a preset fee after your ad is clicked. Google Ads is a platform that works like this.
• SEO (search engine optimization): This is the process of optimizing your website to increase its ranking on search engine result pages (SERPs). Unlike PPC, SEO is not that costly.
• CPC (cost-per-click): This is a commonly used term in pay-per-click advertising, which refers to the amount you pay for each click your ad gets from a user. The difference between CPC and PPC is that CPC is the metric, while PPC is the method.

Google Pay-per-Click Ads Takeaways

Investing in pay-per-click advertising on Google is the quickest way to get to the top results. You can launch a Google Ads pay-per-click campaign in less than an hour and get your website to appear instantly under sponsored search results.

To set up Google pay-per-click advertising and rank well, you first must conduct extensive keyword research and then enter the Google Ads auction. In it, your ad will be ranked based on 6 factors:

• Bidding Amount
• Ad Quality
• Ad Assets
• Ad Rank Thresholds
• Ad Context
• Ad Competition

Rather than being pressured to shell out huge amounts on your campaign, choose to start small. With Google pay-per-clicks ads, you can set limits according to your budget and pause/resume your campaigns depending on their performance.

Follow the best practices in Google pay-per-click advertising, track results, and you’ll quickly boost your website traffic.

Google Pay-per-Click Ads FAQ

1. How Much Does Google Ad Pay Per Click?

The amount brands pay for Google Ads varies extensively, particularly since you get to set a budget. Some businesses average $0.5 for every click; however, that’s not set in stone. Even Google assumes this rate and says that there’s a $2 return for every $1 with Google PPC ads.

2.How Do I Create a Pay-Per-Click Ad on Google?

After determining that Google pay-per-click advertising is the appropriate route for your brand, you can follow these steps to start a Google Ad campaign:

1. Create a Google Ads account.
2. Outline your campaign goals.
3. Add a detailed description under the “Describe your business” section.
4. Specify your geographic location.
5. Set up keywords.
6. Write your ad and set up a budget.
7. Fill out the “Budget and review” section.
8. Set up billing and press submit.

3.How Many Clicks Are Good for Google Ads?

Your click-through rate depends on numerous factors like your industry and keywords. However, according to LocaliQ, the average CTR in all industries is around 6.42%.