Following is the brief explanation of the working of pay per click advertising.
You set the bid amount for specific targeted keyword phrases in your Pay Per Click
Management campaign. Choose the best keywords that you think your customers
(searchers/visitors) are using to find your products or services.

This form of Internet marketing is very simple. The higher your PPC bid amount, the
higher you placement will be in the returned “sponsored links” results for those PPC
keyword phrases.

If your pay per click advertising efforts are successful and you are the highest bidder, you will be rewarded with the top listing in the “paid” or “sponsored” listing results, which are usually listed first, above the organic listing results on pay per click search engines.

Then, every time someone “clicks through” on your “paid link” you pay the bid amountvthat you originally set. Basically, if you are willing to pay the top price, you get the top paid listing placement. Using PPC analytics, you can also measure your results and adjust your pay per click advertising to improve ad performance.