--- title: "What is PPC? Pay-per-click advertising | Product Metrics" description: "PPC (pay-per-click) is online advertising where you pay when someone clicks your ad. See how a click is priced, where shop ads appear and which metrics matter." canonical: "https://www.productmetrics.io/glossary/ppc" pageType: article language: en publisher: "Product Metrics" author: "Berend Vrakking" datePublished: 2026-10-27 dateModified: 2026-10-27 --- > Content index: https://www.productmetrics.io/llms.txt # PPC (pay-per-click) PPC (pay-per-click) is an online advertising pricing model in which the advertiser pays each time someone clicks an ad, not each time the ad is shown. ## Formula `Ad spend = clicks × average cost per click (CPC)` Average CPC is what the clicks actually cost, divided by their number. What the clicks earn back is a separate measure: ROAS (revenue ÷ ad spend) or POAS (contribution profit ÷ ad spend). ## Example Cheap clicks, a ROAS of 3 and still a loss: | Step | Value | | --- | --- | | Impressions | 40,000 | | Clicks (click-through rate 2.5%) | 1,000 | | Ad spend (1,000 × €0.50 average CPC) | €500.00 | | Orders (conversion rate 2%) | 20 | | Revenue (20 × €75.00) | €1,500.00 | | ROAS (€1,500.00 ÷ €500.00) | 3 | | Contribution at a 30% margin (€1,500.00 × 30%) | €450.00 | | POAS (€450.00 ÷ €500.00) | 0.9 | | Break-even ROAS (1 ÷ 30%) | 3.33 | Each click cost €0.50 and the campaign returned a ROAS of 3, yet it lost €50.00. At a 30% contribution margin the products needed a ROAS of 3.33 to break even, which is a POAS of 1. Illustrative data. ## Put it into practice - [Calculate it: Break-even ROAS calculator](https://www.productmetrics.io/break-even-roas-calculator): Apply the definition to your products. - [Read the guide: POAS vs ROAS](https://www.productmetrics.io/blog/poas-vs-roas): Work through the concept in more detail. ## For one product, and for an account In Google Ads, a shop advertises its products mainly through Shopping ads and Performance Max. Google charges Shopping ads per click, and they appear on the Shopping tab, next to Google Search results and in Google Images. Performance Max is a campaign type, not another word for PPC: one campaign can serve on Search, Shopping, YouTube, Display, Discover, Gmail and Maps. An account total hides the products. One average CPC and one ROAS for the account mix products that pay for their clicks with products that lose money on every sale, because each product has its own margin and so its own break-even ROAS. Product Metrics leaves the auction, bids and budgets to Google Ads. It writes each product’s segment to a Merchant Center custom label, so you can give a group of products higher or lower priority in your campaigns. Full Signal Tracking sends the profit of each order to Google Ads and Meta, so bidding can aim at what a click earns, not only the revenue it brings. ## Common mistake Calling every paid ad PPC. Google Ads also sells impressions (CPM and viewable CPM) and video views (CPV). A campaign billed per thousand impressions is paid advertising but not pay-per-click, and its cost per click is worked out afterwards rather than paid. ## Questions ### Is PPC the same as Google Ads? No. PPC is a way of paying for ads, and Google Ads is one platform that sells them. Microsoft Advertising and Amazon Ads sell clicks too, and Google Ads also sells impressions and video views. ### What decides where a PPC ad shows in Google? Ad Rank. Google calculates it from factors that include the bid, the quality of the ad and landing page, the Ad Rank thresholds, the competition in the auction and the context of the search, such as location, device and time. A higher bid alone does not guarantee the top position. ### How much does a PPC click cost? There is no list price: an auction sets the cost of each click. In Google Ads you pay what it takes to clear the Ad Rank thresholds and beat the ad ranked below yours, which is often less than your maximum CPC bid. ## Sources - [Google Ads Help: About Ad Rank](https://support.google.com/google-ads/answer/1752122) - [Google Ads Help: Actual cost-per-click (CPC)](https://support.google.com/google-ads/answer/6297) - [Google Ads Help: About Shopping ads](https://support.google.com/google-ads/answer/2454022) - [Google Ads Help: About Performance Max campaigns](https://support.google.com/google-ads/answer/10724817) - [Google Ads Help: Determine a bid strategy based on your goals](https://support.google.com/google-ads/answer/2472725) ## Keep reading - [Return on ad spend (ROAS)](https://www.productmetrics.io/glossary/roas): The revenue a click brings back per euro of ad spend. - [Smart Bidding](https://www.productmetrics.io/glossary/smart-bidding): How Google Ads sets the bid in each auction for you. - [Performance Max](https://www.productmetrics.io/glossary/performance-max): The Google Ads campaign type that serves across Search, Shopping, YouTube and more. - [Google Ads Auction Insights](https://www.productmetrics.io/blog/google-ads-auction-insights): See which advertisers you meet in the same auctions, and how often you outrank them. - [Google Shopping ads for beginners](https://www.productmetrics.io/blog/google-shopping-ads-beginners-guide): Set up Shopping ads, the click-priced ads that show your products. - [Ecommerce PPC by product profit](https://www.productmetrics.io/blog/ecommerce-ppc-profitability): Judge each product by its margin and break-even ROAS, not the account-wide ROAS. - [PPC research](https://www.productmetrics.io/blog/ppc-research): Check keywords, competitors and the break-even CPC before you pay for a click. - [Product Segmentation](https://www.productmetrics.io/product-segmentation): See each product in one of six segments, by volume and return. - [Full Signal Tracking](https://www.productmetrics.io/server-side-tracking): Send profit to Google Ads and Meta, so bidding aims at what a click earns. --- Written by Berend Vrakking, founder of Product Metrics. Last updated 2026-10-27. HTML version: https://www.productmetrics.io/glossary/ppc