PPC Advertising › how it works 12.4 how it works PPC advertising is used for a number of channels and platforms. Quite simply, the advertiser pays when a user clicks on an advert. On the display network CPM is also an option. However, there is a lot more that goes into the process. PPC advertising is usually run as an auction model, so advertisers place bids to appear based on certain criteria. The advertising platform determines when adverts are eligible to appear and serves them as appropriate. The advertiser then pays the advertising platform when their advert is clicked on. With PPC advertising, the advertiser: • Creates the copy for an advertisement. • Determines the landing page for the advert. • Selects the keywords or criteria for which that advertisement should appear. • Chooses the maximum amount they are willing to pay for a click on the advert or per 1000 impressions (CPM). The advertising platform: • Checks the advert for compliance to editorial guidelines. • Displays the advert for relevant search queries or other criteria. • Determines the rank of the advert based on the advertiser’s maximum bid and the relevance of the advert (which includes factors such as clickthrough rate (CTR), and ad copy, keyword and landing page relevance). For ease, we classify PPC advertising according to the type of environment the advert appears in. 1. Search PPC advertising: this is where the majority of PPC advertising spend is today, and is what most people think of as PPC advertising. This refers to the adverts that appear on search engine results pages. These are mostly text only adverts, but more formats are becoming available. Platforms for running these adverts include Google AdWords and Microsoft’s adCenter. Targeting is based on the search term used. 2. Display advertising: this is a strong growth area for PPC advertising. Adverts appear on content pages, such as news sites. These can be text ads or banner adverts. Platforms for managing these adverts include Google AdWords and AdDynamo. Targeting is contextual, based on the content of the page, or behavioural, based on the behaviour of the user to whom the advert is served. 3. Social network advertising: this is also an important growth area for PPC advertising. Adverts are shown to users of social networks. Social networks include Facebook, YouTube (via Google’s AdWords) and LinkedIn. It often complements other advertising solutions offered by the social network. Targeting is often behavioural, based on user interests, or demographics, but can be keyword or content based as well (especially for YouTube advertising