What Is PPC (Pay Per Click) and Is It Right for Your Business?
PPC is the simplest advertising model ever invented and one of the easiest to lose money on. Here is what it is, where it runs, and the arithmetic that tells you whether your campaign is actually making a profit.
PPC stands for pay per click. You bid to show an ad, and you are only charged when someone clicks it, not when it is merely displayed. Google Search is the biggest PPC channel, but Meta, LinkedIn, YouTube and Microsoft Ads all sell clicks the same way. For most Australian small businesses it works if a customer is worth more than roughly $400 in gross profit and you can fund at least three months.
The appeal is obvious. Nobody clicks, nobody pays. Compared with a letterbox drop it feels almost risk free. It isn’t. The risk moves to everything that happens after the click, and that is where most small campaigns quietly bleed out.
Where does PPC actually run?
PPC is a pricing model, not a platform. Any ad network that charges per click is PPC. Most Australian businesses only think of Google Search, which is a shame, because the other channels do different jobs.
Google Search is intent based. Someone types “emergency plumber parramatta” and you appear. It is the priciest traffic on this list and usually the best, because that person has already decided they have a problem. Google Shopping does the same for products, image and price in the ad. Display is Google’s banner network, cheap per click and mostly useless for direct response unless you are remarketing. YouTube needs real creative, not a slideshow.
Meta (Facebook and Instagram) is interest based. Nobody on Facebook is searching for a bookkeeper, so you are interrupting them and the creative does the heavy lifting. Clicks are cheap, lead quality more variable. LinkedIn is brutally expensive at $8 to $20 a click here, and only makes sense when a client is worth five figures.
Then there is Microsoft Ads, running Bing, Yahoo and the search box built into Windows. Australian businesses ignore it almost universally. Search share is single digit percentages, but clicks are often 20 to 40 per cent cheaper than Google for the same keyword, and the audience skews older and more corporate because it is the default on work machines. You can import your entire Google account in ten minutes. Free upside, sitting on the table.
Which PPC metrics actually matter?
There are about forty metrics in a Google Ads dashboard and five that decide whether you keep advertising. Click through rate and cost per click are diagnostics. Cost per acquisition and return on ad spend are the verdict.
The trap is optimising the diagnostics. A campaign with a lovely 12 per cent click through rate and a $2 cost per click still loses money if those clicks never become customers. We have seen accounts where every chart was green and the phone never rang.
| Metric | What it means | What good looks like |
|---|---|---|
| Cost per click (CPC) | What you pay each time someone clicks the ad | Varies hugely by industry: $1 to $3 retail, $8 to $20 trades and local services, $30 to $60+ legal and finance |
| Click through rate (CTR) | Clicks divided by impressions, so how compelling the ad is | Above 5 per cent on branded search, 3 to 8 per cent on tight service keywords. Under 2 per cent means the ad or the keyword is wrong |
| Conversion rate | Share of clicks that turn into an enquiry, call or sale | 5 to 12 per cent for a dedicated service landing page. Under 3 per cent and the page is the problem, not the ads |
| Cost per acquisition (CPA) | Total spend divided by customers won, not leads | Must sit below your gross profit per customer. Everything else is commentary |
| Return on ad spend (ROAS) | Revenue divided by ad spend | 3:1 is a common floor, but a 3:1 ROAS on a 25 per cent margin loses money. Judge it against margin, not the ratio |
| Impression share | How often you appeared out of the times you could have | Only useful once you are profitable. Low share plus good CPA means increase the budget |
How do you work out if a PPC campaign is profitable?
Two numbers you already know decide this: gross profit per sale, and close rate on enquiries. Everything else works backwards from there. Do it on a napkin before you spend a dollar.
Take a Sydney plumbing business. Average job $850 excluding GST. After materials and labour the gross profit is roughly 45 per cent, so $382 a job. Of the people who ring or fill in the form, they win about half.
Now the campaign. A month at $1,200 in ad spend, at a $12 average cost per click, buys 100 clicks. The landing page converts at 8 per cent, so 8 enquiries. Cost per lead is $150. Close half and you have 4 jobs, so the cost per acquisition is $300.
$300 against $382 of gross profit is $82 per job, or $330 across the month. Revenue is $3,400 on $1,200 of spend, a 2.8:1 return on ad spend, which sounds respectable in a report. Then the $400 management fee lands and the whole month is $70 underwater.
That is not pessimism, it is the median first quarter. The useful part is what it tells you to fix. Lift the landing page from 8 per cent to 12 per cent, very achievable with a proper service page instead of a home page, and you get 12 leads, 6 jobs and $2,292 of gross profit against the same $1,600 of cost. Roughly $690 of real profit on identical clicks. Or work the close rate: chasing unanswered enquiries within the hour beats any bid adjustment.
The number to write down is your maximum cost per lead: gross profit per sale multiplied by close rate. For the plumber that is $382 x 0.5 = $191. Pay more than that and you are buying revenue, not profit. If you want a second opinion on whether it stacks up in your industry, our Google Ads management team will run the model with you before anything goes live.
Rule of thumb. If your gross profit per customer is under about $150, PPC on Google Search is very hard to make work in Australia at current click prices. Put the money into SEO and referrals, or into a repeat purchase model where the second order carries the cost of winning the first.
What is a realistic minimum PPC budget in Australia?
For a local service business in a capital city, $1,500 to $2,500 a month excluding GST in ad spend, held for three months. Below roughly $1,000 a month the data is too thin to make decisions from, and you spend the whole time guessing.
The reason is arithmetic, not sales pressure. At a $15 click, $600 a month buys 40 clicks, which might produce two or three enquiries. Two enquiries tells you nothing about whether the keyword works or you got lucky. Google’s automated bidding is worse off again: it wants around 30 conversions in 30 days before it has anything to learn from, and starved of that it spends erratically.
Low competition niches and regional areas can work on $800 to $1,200. Sydney legal, cosmetic and finance need $5,000 plus to be visible at all. Three months is the honest minimum: month one collects data, month two cuts the waste, month three is the first fair read. Anyone promising profit in week two is selling.
How do PPC management fees work and which model is fairest?
Three models exist. Percentage of ad spend, usually 10 to 20 per cent with a monthly minimum. Flat fee, typically $600 to $1,500 a month excluding GST for a small to mid account. Or a hybrid: flat base plus a smaller percentage above a threshold.
Percentage of spend has a conflict of interest baked in and everyone in the industry knows it. Your agency’s revenue rises when your budget rises, whether or not the extra spend was profitable. Nobody says “spend less this month” when it costs them income to say it. Most agencies manage that honestly, but the incentive points the wrong way, and it bites hardest where you need blunt advice: a campaign scaling into diminishing returns.
Flat fee is our preference under about $10,000 a month in spend. The work is much the same whether you spend $2,000 or $4,000, the fee is predictable, and nobody has a financial reason to talk you into a bigger budget. Above that a hybrid is reasonable, because large accounts genuinely take more hours. Whatever the model, insist that ad spend and management appear as separate lines on the invoice. A blended number is a red flag, and if it comes with a twelve month lock-in, walk. Here is how we structure ongoing campaign management and reporting if you want a benchmark.
Should you run PPC in house or hire an agency?
Run it in house if someone can give it three to five hours a week, every week, and you spend under about $3,000 a month. Below that, agency fees eat too much of the budget to justify themselves.
The honest case for doing it yourself: the interface is not that hard any more, you know your customers better than an agency will, and the saved fee goes into clicks instead. The case against: PPC punishes inconsistency. An account left alone for six weeks drifts, and budget leaks to queries you would never have chosen.
One warning about the free help. Google assigns reps who ring offering to “optimise” your campaign. They know the platform, but they work for Google, and their advice leans towards broader match types, automated bidding and higher budgets. Take the call, take notes, apply nothing that afternoon.
What setup mistakes waste the first month?
Four errors account for most of the money burnt in a new account. All four are fixable before launch.
- No conversion tracking. If Google cannot see which clicks produced a phone call or a form fill, you are optimising blind and so is the algorithm. This includes call tracking, because in trades and healthcare the majority of enquiries are calls, not forms. Set this up first, test it, then turn the ads on.
- Launching without a negative keyword list. Bid on “electrician” and you will pay for “electrician apprenticeship”, “electrician salary” and “electrician courses” within days. Build a starter list of jobs, salary, DIY, free, cheap and course terms before launch, then read the search terms report weekly for the first month.
- Sending every click to the home page. Your home page is a menu. Someone searching for one specific service should land on a page about that service, phone number visible without scrolling, form above the fold. This one change moves conversion rate more than months of bid tinkering.
- Broad match on a small budget. Broad match lets Google decide what your ad is relevant to, and on $1,500 a month it will spend your budget exploring. Start on phrase and exact, prove what converts, loosen up later.
A fifth catches people out: Google opts new Search campaigns into the Display Network and search partners by default. Uncheck both at launch.
PPC and SEO are not an either/or decision, and they feed each other: search term data from ads tells you exactly which pages are worth writing. More on the trade offs and channel choices in the Google Ads and marketing section of the Knowledge Centre.
So is PPC right for your business?
Yes, if three things are true. Your gross profit per customer comfortably exceeds your likely cost to acquire one, people actively search for what you sell, and you can fund a real budget for a quarter without panicking in week three.
If nobody searches for your category, Meta may still work, but the creative matters far more. Thin margins and small orders point towards retention and referrals instead. And if your website converts poorly today, fix that first. Paying $15 a click to send people to a page that doesn’t convert is the most expensive way to discover you have a website problem.
Common questions
Is PPC the same thing as Google Ads?
No. PPC is the pricing model and Google Ads is the biggest product that uses it. Meta, LinkedIn, Microsoft Ads, Pinterest and Amazon all sell advertising on a pay per click basis too. People use the terms interchangeably in Australia because Google Search dominates the market, but if someone says they run PPC, ask which platforms. The answer tells you a lot about how broad their experience actually is.
How long before PPC starts working?
You will get clicks on day one and enquiries usually within the first week or two. Profitable, stable performance normally takes eight to twelve weeks. Month one gathers data and exposes waste, month two is where you cut the losing keywords and fix the landing page, and month three is the first honest read. Anyone quoting profitability in the first fortnight is either lucky or not measuring properly.
Can I pause PPC and keep the results?
No, and this is the main structural difference from SEO. Turn PPC off and the traffic stops that afternoon. Turn SEO off and rankings decay slowly over months. That is not an argument against PPC, it is an argument for understanding what you are buying: PPC is a tap you control, SEO is an asset that compounds. Most Australian businesses that do well run both.
What is Quality Score and does it really matter?
Quality Score is Google’s one to ten rating of how relevant your keyword, ad and landing page are to each other. It matters commercially because a high score lowers what you pay per click for the same ad position. Moving from a 4 to an 8 can cut your cost per click meaningfully. Don’t chase the number itself; fix the underlying alignment between keyword, ad copy and the page, and the score follows.
Do I need a separate landing page or can I use my website?
Use your website if you have proper individual service pages. Use a dedicated landing page if you don’t, or if the offer is specific. What you must not do is send paid traffic to the home page. The page a click lands on should match the search word for word, answer the obvious objections, show the phone number without scrolling, and have one clear action. Nothing else.
Is Microsoft Ads worth switching on in Australia?
If you are already spending on Google, yes, almost always. The volume is much smaller because Bing’s search share here is in the low single digits, but clicks are often 20 to 40 per cent cheaper and the audience skews older and more corporate. The import tool copies your Google campaigns across in about ten minutes. Set a small budget, review after a month, and keep it if the cost per lead beats Google.
What should I ask an agency before signing up?
Four questions. Who owns the Google Ads account, and will you keep access if you leave (the answer must be you). Is management billed as a flat fee or a percentage of spend. Is there a lock-in contract. And what does the reporting show: if the sample report leads with impressions and clicks rather than cost per lead and cost per acquisition, expect a lot of green charts and a quiet phone.
Not sure if the numbers stack up?
Tell us your average job value and close rate and we will tell you honestly whether PPC is worth it for your business, before you spend anything. No lock-in contracts, Australian based team, 20+ years of building and marketing sites for Australian businesses.