Understanding PPC Advertising and What It Can Do for Your Business

Search marketing is an umbrella term for two approaches used in online marketing: search engine optimization (SEO) and search engine marketing (SEM). Pay-per-click advertising, commonly known as PPC, is a form of SEM.

In this guide, we will look at SEO and SEM in terms of search marketing, evaluate the similarities and differences between the two, describe the advantages of PPC, and provide the steps for creating a successful PPC campaign.

It’s worth noting that the world of search marketing is changing rapidly with the rise of AI. The topics covered in this guide are foundational to understanding how search marketing works. Once you understand the different levers that control how someone can find your site, dig deeper. Search algorithms are constantly updated, and PPC options change over time. 

What is search marketing?

Businesses that use both SEO and SEM synergistically often achieve the most profitable results. But what do the terms really mean?

SEO stands for search engine optimization. Simply put, SEO refers to the internet authority your business earns organically and for free. “Organically” references the raw data that shows whether traffic to your site has grown based on genuine interest, influencer links, and successful optimization campaigns.

The entity that decides whether you earn SEO credibility is Google’s algorithm and other search engines like it.

SEM refers to the internet authority that your business must pay for. This comes in the form of advertising that is much more similar to traditional display-type marketing. Today, the most common form of internet advertising is PPC, or paid search.

When a company seeks to raise its authority both organically with SEO and inorganically with paid search or SEM, it is using the best of both worlds to penetrate its target market through search marketing.

[For more assistance on PPC, check out How to Hire a Paid Search, PPC Vendor.]

SEO vs. SEM

Understanding how to structure a truly successful search marketing campaign relies on recognizing the overlap and differences between SEO and SEM and how each technique represents complementary parts of a comprehensive strategy.

SEO campaigns require activities such as: 

• Keyword optimization: Research keywords that drive business to your website and use them in compelling content.
• Link-building: PR firms or freelance contributors ensure that links to your website appear on other high-authority sites.
• Content marketing: This entails the rich tapestry of marketing techniques surrounding consistent, valuable, and compelling content.

Much like building your own personal credit, building credibility online through SEO takes time and patience. Most of the time, the more strategies you deploy, the better your marketing will be. However, there are some exceptions to this rule.

Some SEO techniques known as "black hat" techniques are generally frowned on within the industry. These practices include things like keyword stuffing, misusing tags, and other activities that compromise your site's user experience and functionality to get a quick boost in SEO.

Google’s algorithm has caught on to these techniques and typically penalizes sites that try to use shortcuts to jump ahead. When it comes to SEO, it’s a long game, and not a cheap one, either. The cost estimates of using an SEO service range from the low hundreds to upward of tens of thousands of dollars per month.

If SEO is the marathon, then SEM is the sprint. SEM is the process by which companies can buy keyword exposure on a search engine. The all-encompassing digital advertising standard for your business is found across all search marketing channels. It includes SEM campaigns like PPC, as well as organic SEO initiatives.

One thing both SEM and SEO have in common is that they both require keyword research. If you aren’t researching your keywords well before buying them, you are throwing your money into a digital abyss.

Key PPC terms every business owner needs to know

PPC takes time to master, particularly because it evolves rapidly. Start by learning some of the key terms:

• Attribution: This term conveys which parts of your marketing — keywords, devices, ads — are driving users to take an action, such as making a purchase. It helps you refine your search marketing strategy by prioritizing the right channels.
• Cost-per-click (CPC): CPC is the amount you pay each time someone clicks on your ad. Without getting too into the weeds, CPC varies based on competition for your keywords, your Google Quality Score, and your bidding strategy.
• Click-through rate (CTR): CTR is the percentage of users who see and click on your ad. The higher your CTR, the better your campaign is performing.
• Quality Score: Google’s Quality Score measures the quality of your ads, keywords, and landing pages and assigns a rating from 1 to 10 to each keyword in your account. Higher quality ads can lead to lower prices and better ad positions.
• Return on Ad Spend (ROAS): ROAS measures how much revenue you earn per dollar of advertising spend. A ROAS of 5 means you earn $5 for every $1 spent. 

Building a successful PPC campaign

When you’re getting ready to start search marketing for the first time, it’s important to prepare your budget and set the right expectations. When done correctly, SEM and SEO exponentially increase your business success.

PPC is a good solution for anyone who is getting ready to embark on a search marketing campaign. PPC can help you:

• Generate new leads.
• Increase revenue.
• Create brand recognition and awareness.

The bidding process for PPC can be tricky. Let’s walk through the steps to building a PPC campaign and break it down.

Step 1: Choose your platforms.

There are two major players in the search engine world, and if you can, you should be on both of them. These are Microsoft Ads and Google.

Microsoft Ads covers Bing, Yahoo, DuckDuckGo, and other search engines within Microsoft’s extensive network and key partnerships. That means your keyword-based ad could appear on any number of search websites in this extensive network.

However, Google Ads continues to be the gold standard in search engine marketing. If you can only choose one engine to be on, it should be Google Ads. Google Ads gives you exposure across YouTube and Google assets like Discover, Search, and more. Start with Google Ads to get the most from your PPC campaign.

Step 2: Research keywords.

The next step is selecting the right keywords. To figure out which keywords to use, find a good keyword tool. There are several free options online if you don’t have one in mind already.

A good keyword has a high search volume and low competition. These are metrics that you will have access to in most keyword tools. Another metric to look for is keyword difficulty, which will tell you how hard it is to rank naturally for the term.

Before you get to this point, you want to think about your ideal customers and what their interests are. You can gather this information by using social media tools, keeping an eye on the competition, and Google’s autocomplete feature. Only then should you evaluate those terms using a keyword tool that can offer suggestions and metrics.

Step 3: Select keywords and negative keywords.

Once you have put together a strong list of potential keywords, decide which ones you are going to select for purchase in your campaign dashboard.

You want to choose two types of keywords:

• Regular keywords, which will be the ones on which your ad is based.
• Negative keywords, which are the words you definitely do not want your ad to use, because they won’t convert to a sale.

Defining where your ad should not go is important, too, as it will help you save money in the long run.

Step 4: Structure your ad groups.

When structuring your ad campaign, it makes the most sense to split your campaign into categories and groups. Doing so will make things easier for you to manage and will likely achieve the best results. Here’s how:

• Select the categories. These have overarching themes like “Fall Items.”
• Within each category, identify ad groups: It can be things like fall makeup, fall sweaters, and fall scarves.

In the examples above, the category represents a larger group of like items with ads being deployed, while the ad group represents a more targeted group of ads that will each likely need different keywords in order to be marketed successfully.

Step 5: Focus on ad copy.

Finally, while PPC ads are relatively small, up to 90 characters, it’s important to make the most of this small amount of space. To have an effective PPC campaign, you need to make sure your description is compelling enough to catch a searcher's attention.

Bidding on PPC ads

SEM involves an auction process, a behind-the-scenes calculation that determines whether your ad shows at the top of a search result. The “auction” determines three things:

1. If your campaign is eligible for the auction.
2. The subsequent order in which eligible ads appear on the page.
3. How much each advertiser will pay per ad click (cost per click).

Basically, just because you target a specific series of keywords doesn’t guarantee your ad will always appear at the top search results page when a user searches that keyword. Ads are ranked based on a number of factors, including bid amount, ad quality, Google’s Quality Score, and platform-specific factors. Higher bids are more likely to be shown, but if the ad is poor quality or the website it directs to crashes consistently, the bid amount won’t play as big a role.

PPC pricing is usually structured in one of three models: CPC, cost per thousand impressions (CPM), or cost per acquisition (CPA). The best option is CPC, meaning you only pay when someone clicks on your ad.

How to set a realistic PPC budget and avoid overspending

“One of the most effective ways to set a PPC budget is by working backwards from your revenue goals. Start with how much you want to earn, then calculate how much you need to spend to get there,” wrote the Digital Marketing Institute.

There’s a formula that can help: 

Ad Budget = (Target Revenue ÷ Conversion Rate) × CPC.

It’s also useful to look up industry benchmarks to assess what you can expect. Wordstream publishes PPC benchmarks each year; the average cost per click in 2026 is $5.42, but the range varies from $1.63 to over $9, depending on your industry.

A common way to overspend is to ignore the other costs that come with PPC advertising. Not only should you budget your ad spend, but you should also account for online marketing services (if you’re not doing the setup in-house), subscription tools, and creative production for your ad copy and visuals.

Finally, PPC isn’t a set-it-and-forget-it approach. You’ll need to monitor and optimize your campaigns daily to adjust bids and allocate your budget to the best-performing campaigns. Immediately move your budget from campaigns that don’t perform well to those that do to maximize the value of your PPC campaign. 

CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.

CO—is committed to helping you start, run and grow your small business. Learn more about the benefits of small business membership in the U.S. Chamber of Commerce, here.