How are pay-per-click ads calculated?

If you want to use a popular online advertising tool such as Google AdWords and bid on keywords to show paid ads, these tools usually show the CPC of the target keywords. A publisher will most likely lower the fixed price if an advertiser offers a long-term or high-value contract. In addition, dozens of smaller niche platforms, such as LinkedIn and Quora, focus on specific audiences and journeys, further expanding companies' options for communicating with target markets. Advertisers can use this targeting to target only cities with physical stores or regions where a product is most in demand (for example, it allowed advertisers to choose a specialized magazine that reached the audience most likely to be interested in their product).

Targeting limits advertising to a company's target audience and can do so in a wide variety of dimensions. When advertisers need to limit the geographic location where ads reach, they use geolocation objectives. Two main types of PPC ad placement are found on search engine results pages (SERPs) and on websites or pages aligned by topic. Advertisers bid for the opportunity to show their ad in a specific context that they consider valuable for their specific objectives.

The CPC is used to determine the costs of showing ads to users on search engines, the Google Display Network for AdWords, social media platforms, and other publishers. Controlling the match level allows advertisers to limit “bad matches” that aren't likely to convert, or open up the match to cast a wider net if the stricter initial match type malfunctions. Today, search engines use complex algorithms to ensure that paid ads are as relevant as the main organic results; a key objective of the platform is to provide relevant results that match the user's intention. The context can be based on keywords, a specific target audience, or even the location of the location, any of which are values calculated for the advertiser when generating leads, selling products or services, or creating a consideration.

For example, an advertiser could select a like-minded audience whose lifestyle includes offer-related activities, use a set of keywords that is further reduced, limit advertising to mobile devices and the time of day when conversions increase historically. There are two ways to think about how you want to manage your advertising strategy in terms of cost. In the first instance, the ad would target anyone who is likely to be a motocross racing enthusiast, and the second would target websites that cover motorcycle racing and related topics.