Search ads · also called Pay per click, Paid search
PPC (pay per click)
PPC, or pay per click, is an advertising model in which the advertiser pays only when someone clicks the ad, not when it is merely shown.
In pay-per-click advertising, showing an ad costs the advertiser nothing. The charge happens at the click. The price of that click is the CPC, set by an ad auction. Search ads on Google and Bing are the classic PPC product, and many social and native platforms also sell clicks this way.
Search arbitrage is PPC on both sides of one business. The arbitrageur buys visitors (often per click, sometimes per thousand impressions) from a traffic source, and earns when some of those visitors click a search ad that an advertiser pays for per click. Profit is the difference between the two prices, adjusted for how many visitors go on to click: see the spread.
The model's strength is also its weak point. Because the click is the billing event, everything depends on the click being genuine. That is why invalid click filtering, click fraud and traffic quality dominate the industry's rule books, and why advertisers judge PPC by what happens after the click, the conversion.
"PPC" is also used loosely as a job title and as shorthand for paid search management in general.
Think of it like this
A shop that pays a leaflet distributor only for each customer who walks in holding the leaflet, not for each leaflet handed out.
An example
For example, an ad is shown 1,000 times, clicked 30 times at $1.50 per click. The advertiser pays $45, not a cent for the other 970 showings.
Related terms
CPC (cost per click)
CPC is the price paid for one click on an ad; in search arbitrage it is what the arbitrageur pays a traffic source for each visitor.
SEM (search engine marketing)
SEM, search engine marketing, is the practice of winning customers from search engines, today mostly meaning paid search ads bought per click.
Ad auction
An ad auction is the instant, automated contest run for each search that decides which advertisers' ads appear, in what order and at what price per click.
Click
A click is one person tapping or clicking on an ad or link and being taken to another page.
Google Ads
Google Ads is Google's advertising platform, where businesses bid to show ads on Google Search, its search partner sites, YouTube and other properties.
The spread (margin)
The spread is the gap between what an arbitrageur earns from a visitor and what that visitor cost to buy.