What does pay-per-click mean?

Pay-per-click (PPC) is an advertising model where a business is charged a fee only when someone actually clicks on its ad, rather than being charged for the number of times the ad was simply shown (impressions). This means ad spend is directly tied to actual audience interaction rather than passive visibility, which is why PPC campaigns are measured heavily on cost-per-click (CPC), the average amount paid for each click, since a lower CPC means more visitors can be driven for the same budget.

CPC itself is determined through a real-time auction system on platforms like Google Ads, where advertisers bid on specific keywords, and the final price paid depends on competition for that keyword, the ad’s relevance and quality score, and the advertiser’s maximum bid, meaning highly competitive keywords in categories like insurance or legal services can carry a much higher CPC than a niche, low-competition term.

PPC is one specific pricing model within performance marketing (distinct from pay-per-impression or pay-per-conversion pricing), and it’s generally favoured for search advertising specifically because someone actively searching a keyword and clicking an ad has already demonstrated clear intent, unlike someone who merely saw an ad without clicking.