In Pay-Per-Click Advertising (PPC) an advertiser typical bids a maximum amount they will pay for a click on a keyword or set of keywords. This bid is then inserted into advertising auction along with bids from other advertisers. The PPC platform (Google Ads, Microsoft Ads, etc…) uses those bids along with other pieces of information to help determine which advertiser’s ad appears at the top of the search result for a specific search.

For example if you bid on the keyword ‘widget’ and you bid $1.25 but only wanted to bid on that keyword when it was searched from Houston, and I bid $1.00 on the keyword ‘widget’ but only wanted it to appear when searched by someone in Dallas, then the PPC platform / search engine would display both ads. However, if we both selected the same city, my $1.00 bid would either be underneath your $1.25 bid or not show to a user at all.

This is a very simplistic way of thinking about Pay-Per-Click advertising, but it illustrates how the systems typically work.