PPC can work in a few different ways, depending on your ad network and ad type. For example, while similar, Google Ads and Microsoft Advertising use different algorithms for their ad auctions. When discussing how PPC advertising works, many refer to Google’s process.

So, if you advertise on Google, you can expect the following:

  • A user makes a search on a search engine like Google
  • Google launches the ad auction, compiling all relevant ads and their Quality Scores
  • The auction looks at each ad’s bid, quality, and potential impact to assign an Ad Rank
  • Google delivers the ads in order of highest Ad Rank to lowest Ad Rank

During the ad auction, Google also calculates your CPC with the following formula:

CPC = Ad Rank of the ad below you / Your Quality Score + £0.01

This formula is why PPC consultants, as well as agencies, focus on creating high-quality. If you build a helpful ad, you can achieve a better Quality Score, which can lead to lower costs and an improved Ad Rank.