How Does Search Advertising Work? A Marketer’s Guide to the Basics of Google PPC

Adam Smartschan

Partner & Chief Strategy Officer

Search advertising is a marketing tactic that puts targeted messages in front of users who’ve expressed interest in a specific topic. But how does search advertising work, really? We’ll break it down from soup to nuts in this guide.

how does search advertising work?

Before we start, a point of clarification: 

PPC is technically any form of digital advertising where you pay by the click, rather than by the impression. (Impression-based pricing is called CPM, or cost per mille.) This guide focuses primarily on search advertising, the thing most people are referring to when they say “PPC” or “pay-per-click.”

With that out of the way, here’s what this post will teach you:

  1. The definition of PPC
  2. How search advertising works on Google
  3. What quality score means
  4. Common search advertising mistakes
  5. Tools that help with Google Ads

Definition of Pay-Per-Click

Pay-per-click is an advertising format where brands (like you, probably) pay an outlet (like Google) when someone clicks on their ad. Impressions (i.e., someone seeing your ad) do not cost anything. 

The opposite is CPM advertising. (That’s cost per mille, a Latin word for thousand.) In CPM, you pay $X for every 1,000 times your ad is seen. Clicks in CPM are free. Impressions in PPC are free.

Here, we’re talking primarily about search advertising using Google Ads. So when we say PPC, that’s what we mean.

How Does Search Advertising Work on Google?

Search advertising seems simple. But it’s really not, particularly when you’re talking about Google search advertising.

In 2013 or so, you’d build a list of keywords, write some basic ad copy and point to your website. Back then, that worked just fine. But the Google Ads ecosystem is nothing like that anymore.

The first thing you need to know about how PPC works on Google is what Google aims to do: Connect users with the most relevant, useful content as fast as possible.

(Well, that’s technically second behind “making piles of money.” But the point stands.)

That means Google is looking at search intent, not just keywords. 

For advertisers, that translates to this: You need to think about more than your keywords and your ad copy.

The fundamentals of Google PPC are still pretty basic. When you use Google Ads for search, you’re promising to pay the search engine some amount of money if someone clicks your ad. In exchange, they give you priority placement over organic results earned from SEO. 

(You can tell if it’s a paid ad because of the little “Ad” badge next to it.)

PPC ads vs. organic results on Google SERP

But how search advertising works isn’t quite as simple as it used to be. First, we need to address keywording and bidding strategies, which have evolved quite a bit. Second, we need to tackle the beast that is quality score.

Google Ads Keywording and Bidding Strategies

The heart of Google PPC is an auction. They want to show the ad most likely to be clicked – and to get Google paid. But you’re not just bidding on being shown when someone searches for a particular word or phrase. 

Well, you are.

Kind of.

Also, kind of not.

There are four keyword “match” types in Google Ads, each of which brings its own intricacies to the party.

Exact Match

The closest thing to old-school “bid on this keyword” advertising is exact match. You’re looking for your ad to be shown when someone searches for an exact phrase. If your exact match keyword is “16mm watch strap,” your ad will be potentially be shown when someone searches for “16mm watch strap,” or very close variants like “watch strap 16.” 

Phrase Match

Phrase match essentially adds words to exact match. If you bid on the keyword “16mm watch strap” using phrase match, you’ll possibly show if someone looks for “white 16mm watch strap” or “16mm watch strap seiko.” Your phrase is still there. That’s phrase match.

Broad Match

Broad match is the blunt object of search advertising. You’re putting a ton of stock and faith in Google algorithm with broad match. It’s meant to show your ad on your exact term, your exact term plus other words, and broader variants that Google thinks are relevant. Your keyword of “16mm watch strap” will probably end up matching “watch strap,” “16mm watch band” and “buy watch band.” It’s, well … broad.

Modified Broad Match

Modified broad is the newest match type in PPC, and maybe the most powerful. It’s the same as broad match, but you tell Google that certain words must be included. 

The syntax of modified broad keywords looks like this:

+16mm +watch + strap

The plus signs indicate that that word must be included for your ad to show. In this case, your modified broad keyword might trigger an ad on a search for “16mm watch white timex weekender strap,” but it wouldn’t for “watch strap timex expedition.” 

Which Match Type Is Best?

Like with so much else in search advertising on Google, it depends.

Modified broad match is powerful if you want to capture traffic around a term while letting users add modifiers. A lot of folks, for instance, add a geographic area when looking for a marketing agency. But Altitude is a global company, so we’re just as happy to work with people who search for “marketing agency philadelphia” as those who just want a “marketing agency.” Modified broad would capture both of those.

Phrase match would probably hit both of those, too, but it likely wouldn’t pick up “marketing ad agency new york,” since the phrase is broken. But if you have a specific multi-word phrase for what you do, phrase match can work very well.

Exact match is extremely precise. It’s best when your offering or product is extremely specific, and you want to be discerning about who sees you (and might cost you money).

Broad match … kinda sucks. We’ve seen it be successful for nonprofits and others who want to cast a wide net, but especially in B2B, it tends to result in a ton of junk clicks.

How Do I Reduce Junk Clicks?

This is where negative keywords come in. A negative keyword in PPC tells Google not to show your ad when a search query includes a word or phrase. 

For example, if you only sell white 16mm watch straps, you would negative the words “black” and “leather,” so when someone searches for a leather watch strap, there’s very little chance your ad will show. 

(Negative keywords are especially critical when you’re using broad or modified broad matches.)

Another good way to reduce wasteful junk clicks is to use software like WordStream, which lets you see every search that showed one of your ads. If a particular phrase that’s irrelevant to you is triggering your pay-per-click ads to show, you should add it as a negative.

So The Highest Bid Always Wins?

Not quite. This is where quality score comes in.

How Search Advertising Really Works: Quality Score

Remember how, in addition to making piles of money, Google wants to connect users with the best content fast? Quality score is how it does that in PPC.

Ultimately, Google wants to make money off advertisers. It’s just good business. But if users get connected with crap results every time, they’ll go to a different search engine. Google combats this by weighing quality score in its search ad auctions.

Quality score is a bit mysterious, but it’s a metric that combines how well an ad and a landing page match the intent of the searcher. If your ad for 16mm watch straps is shown to a user looking for 16mm watch straps and a click takes them to a page selling 16mm watch straps, you’re liable to get a good quality score.

Conversely, if you go with a broad bidding strategy that results in your ad for 16mm watch straps being shown on searches for 14mm watch straps, your quality score will suffer. It’s less relevant, and worse.

Now, quality doesn’t dictate everything. It’s half of the equation. The best search positions are dictated by a basic formula:

Bid x Quality Score = Ranking

A really high bid can outweigh a bad quality score. On the other hand, a good quality score means you can spend less to get better PPC rankings. That’s why a good quality score matters.

How Can You Improve Quality Score?

Easy: Make the experience better for the user.

Well, maybe not so easy.

Fact is, nobody knows exactly what goes into quality score. Google isn’t saying. But we can assume that the search engine wants:

  • A hyper-relevant ad that matches search intent closely
  • A fast landing page with plenty of information

Isn’t that what you want when you’re searching for something? If you want to buy something, you want to be taken to an eCommerce page, not an informational page. Likewise, if you click on an ad promising a free download of a white paper, you sure as heck don’t want to see that it costs $9.99. The more friction-free the experience, the better the quality score. That’s how PPC works.

Common Google Ads Mistakes

Clearly, how search advertising works in 2019 is far different than the relatively simple days of yore. That means there are plenty of opportunities for marketers to make mistakes. Here are a few common ones.

  • Not watching closely enough: There was a time when digital marketing agencies let campaigns run for weeks and months on autopilot to “generate data.” This isn’t good enough. Why? Because every click costs you money. When you’re bidding on a term that costs $10 or $20 per click, even a bad half-day can blow your budget for the month. Ideally, you want to see every single impression you get and respond with either new ads (to match better and improve quality score) or negative keywords (to eliminate junk clicks).
  • Bidding too broad: Be careful before you start bidding on your services. Altitude, for instance, offers B2B marketing strategy. But that’s not a very good keyword for us in PPC. Why? Because someone looking for B2B marketing strategy is probably looking for tips on generating a B2B marketing strategy, not necessarily an agency to provide one. They might find us and they might click, but they’re unlikely to convert. 
  • Focusing on the wrong metrics: If your agency leads by telling you how many impressions your search advertising campaign is getting, fire them. The goal is getting good conversions as cheaply as possible. This is measured in CPA, or “cost per acquisition.” You want to generate as many leads as possible at a good CPA. Impressions and CTR, or click-through-rate, are fool’s gold. All they mean is that people are seeing your ads and clicking them, costing you money. They don’t have any causal relationship to CPA.
  • Getting lazy: The platonic ideal of PPC is single keyword ad groups. You want specific ads to show up for specific keywords, not huge bunches of them. If someone searches for “16mm watch strap,” are they more likely to click and buy from an ad that’s about 16mm watch straps, or “watch accessories”? Obviously, you’d rather have the former. It takes a little extra time, but your ads become infinitely more relevant, driving up quality score and driving down the amount you need to bid to be shown for a term.
  • Focusing on “the keyword list”: This is old-school thinking. Fact is, you don’t know what terms are going to work for you and which aren’t without running some ads (and checking them every day). You’re one person. Your marketing team is a group of people. Google has the biggest data set in the world with the most sophisticated machine learning algorithms. Put that to work, and let your brain rest a bit.

The Best Google Ads Tools

There are a ton of digital marketing tools meant to help with PPC. A lot, unfortunately, are snake oil. But here are a few good ones that we’ve uncovered over 15 years.


WordStream logo

The Google Ads interface is pretty difficult to use, and it doesn’t give you great insights. WordStream fixes both problems, making PPC advertising accessible to even non-technical users. It lets you see exactly what searches users made to show your ads, and lets you react quickly to both positive and negative trends.

WordStream isn’t cheap – figure $250/month or so, minimum – but it’s pretty excellent. Plus, their keyword research utility is about as good as it gets.


SpyFu logo

SpyFu is the ur player in competitive research. It will show you what competitors are advertising on and what their ads look like.

Critically, it also tells you what they’ve stopped advertising on – a sign that you probably don’t want to go there.


LSIGraph logo

While technically not a PPC tool, LSIGraph is valuable for PPC advertisers.

It returns “semantically related” terms for a keyword. Basically, these are terms that add context for a user. They’re best used in ad copy and on landing pages to boost quality score. 


Unbounce logo

A good quality score requires a good landing page. Unbounce lets you build good landing pages really, really fast.

Its WYSIWYG editor and powerful integration tools are so much easier than most content management systems, and it will even take dynamic content to personalize the experience more.

How Does Search Advertising Work? In Conclusion

Pay-per-click advertising sure seems simple. But if you’ve read to this point, you almost certainly know that it’s not. If you’re ready to dip your toes into Google search advertising, be sure to remember to:

  • Think about your keyword match strategy, without getting too specific or too broad
  • Match your ad and landing page experience to what the user actually wants
  • Watch your data closely (like, every day)
  • Develop lots of ad groups, ads and landing pages
  • Invest in some third-party software to smooth out the bumps in the road

Conversely, you can definitely hire a B2B SEM firm. Like, say, us. We’re pretty good at this, and we’d love to work with you.

Adam Smartschan

Adam Smartschan heads Altitude's strategic marketing and branding efforts. An award-winning writer and editor by trade in a former life, he now specializes in data analytics, search engine optimization, digital advertising strategy, conversion rate optimization and technical integrations. He holds numerous industry certifications and is a frequent speaker on topics around B2B marketing strategy and SEO.