--- title: "What are paid ads?" description: "Paid ads in plain English: PPC, CPC and CPM explained, search ads vs social ads, and how to tell if your ad money is working." url: https://dumbcmo.com/blog/what-are-paid-ads category: "Paying to be seen" tags: ["paid ads", "ppc", "google ads", "meta ads", "basics"] published: 2026-10-25 updated: 2026-10-25 reading_time: 5 min author: "The DumbCMO" --- # What are paid ads? > **TL;DR:** Paid ads mean paying Google, Instagram or Facebook to show you to people. They work fast and stop the moment you stop paying, so they’re best for testing and quick wins, not as your only plan. [Notebook](https://dumbcmo.com) › [Blog](https://dumbcmo.com/blog) › Paying to be seen › What are paid ads? Vikram sells handmade leather wallets. He put $100 into Instagram ads on a Friday night. By Sunday, 40,000 people had seen his wallets, 600 had clicked, and three bought one. Was that good? Vikram had no idea. Neither do most people the first time. By the end of this note, you will. ## In normal-people words **Paid ads are renting attention.** You pay a platform like Google, Instagram or YouTube to put your message in front of people, instead of waiting for them to find you. There are two big kinds: - **Search ads** (mostly Google): your ad shows when someone searches for what you sell. They already want something. - **Social ads** (Instagram, Facebook, YouTube): your ad shows while someone scrolls. They weren’t looking. You’re interrupting them, nicely. Most ads are PPC (Pay per click: you only pay when someone clicks your ad.): you pay when someone clicks. Some are charged per thousand views instead, called CPM (Cost per mille: what it costs to show your ad a thousand times.). ## The chai stall version SEO is building a chai stall on a busy road. It takes months, but then people walk past every day for free. Paid ads are hiring a boy with a megaphone to stand at the bus stop shouting “Best chai, 50 metres left!” It works today. **The day you stop paying the boy, he goes home.** ## Where your $100 actually goes Here’s Vikram’s weekend, step by step. Every ad works like this funnel: lots of people see it, fewer click, fewer still buy. **Vikram’s weekend: $100 of Instagram ads** 1. **40,000 people saw it.** That’s a quarter of a cent per person. Cheap. Most scrolled past. 2. **600 people clicked.** $0.17 a click. A 1.5% click rate is decent for a first try. 3. **3 people bought.** $33 of ads per sale. This is the number that matters. So each sale cost him about $33 in ads. A wallet sells for $45 and costs $18 to make. He lost money on every sale. The ad wasn’t the problem: 600 people clicked. The page they landed on was. That’s the pattern to watch for. > **The DumbCMO:** Six hundred people liked it enough to click and three bought? Fix the page, not the ad. ## The four numbers that matter **Ad numbers, translated** | Number | Means | Vikram’s | | --- | --- | --- | | Impressions | How many times the ad was shown | 40,000 | | CTR (click-through rate) | Out of everyone who saw it, how many clicked | 1.5% | | CPC (cost per click) | What one click cost | $0.17 | | Cost per sale | What you spent on ads to get one sale | $33 | **Only the last row pays your rent.** Impressions and clicks are the journey. Sales are the destination. ## Search ads or social ads? **Which kind fits you** - **If** People already search for what you sell (“AC repair near me”) **→ then** Start with Google search ads. Those people want it now. - **If** People don’t know they want it yet (a new snack, a cute wallet) **→ then** Start with Instagram or Facebook ads. Show it to the right crowd. - **If** You haven’t sold anything to anyone yet **→ then** Don’t run ads yet. Sell to ten people the old-fashioned way first. Still unsure? The [should I run ads yet? tool](/tools/should-i-run-ads) walks you through it in four questions. For the head-to-head, read [Instagram ads or Google ads?](/blog/instagram-ads-or-google-ads) ## Do this today - [ ] Work out what one customer is worth to you with the [customer cost calculator](/tools/customer-cost-calculator). - [ ] Pick a test budget you could lose without crying. That’s your first month’s ad spend. - [ ] Decide the one number you’ll judge the ads on: cost per sale, or cost per enquiry. - [ ] Open your website on your phone and try to buy something. If it’s annoying, fix that before any ad. ## Not-so-frequently asked questions ### How much should I spend on my first ads? An amount you can treat as school fees. Many small businesses start with $5 to $15 a day for two to four weeks. Enough to learn, not enough to hurt. ### Why did my ad get lots of likes but no sales? Likes are cheap. People like things they’d never buy. Judge ads on clicks and sales, not likes. ### Is boosting a post the same as running an ad? Same idea, fewer controls. Boosting is fine for a first test. For real campaigns, use the platform’s ads manager. ### Do I need an agency to run ads? Not to start. Platforms make simple ads easy. An agency helps once you’re spending enough that a few percent better is worth their fee. ## Things your agency won’t say - Ads don’t fix a bad offer. They just show it to more people, faster. - The ad account should be in **your** name. Always. - Most small businesses should start with search ads, not social ads. ## Jargon Jail **Locked up: “ROAS”** Return on ad spend. Sales from ads, divided by money spent on ads. **$4 back for every $1 spent is a ROAS of 4.** It’s sales, not profit, so a “good” ROAS can still lose money if your margins are thin. ## Where to go next - Your first Google ad, step by step: [Google Ads for beginners](/blog/google-ads-for-beginners) - The numbers behind it: [CAC and LTV, explained](/blog/cac-and-ltv-explained) - Scams to dodge: [ad spend you can’t see](/scam-watch#hidden-ad-spend) and [“set and forget” ads](/scam-watch#set-and-forget-ads) - Everything on ads: [PPC and paid ads, dumbed down](/ppc) ## Sources 1. Google Ads Help, [“Get negative keyword ideas using the search terms report”](https://support.google.com/google-ads/answer/7102466): how search ads match what people type. 2. Vikram’s numbers are a worked example to show the maths, not a real campaign. ## Related notes - [Meta’s brand formats: Super Burst, First Impression, Reels Trending](https://dumbcmo.com/blog/meta-ads-october-2026-updates): Meta’s Brand Summit (15 Oct) pushed Ads Super Burst, First Impression Ads (US test), and broader Reels Trending Ads. Today (28 Oct) product browsing turns on in existing ads unless you opted out. Here’s the plain-words tour with a doodle for each format. - [ChatGPT ads: how they pick who shows, in plain English](https://dumbcmo.com/blog/chatgpt-ads-how-they-work): ChatGPT ads are chosen by matching your ad to the conversation, then auctioned. 100,000+ advertisers are already in. For most small businesses, watch for now, and don’t move your budget yet. - [Google Ads: new spending controls and a 1-click AI Max test](https://dumbcmo.com/blog/google-ads-channel-priority-and-ai-max): Google Ads is rolling out controls to say which channels get your budget first, plus a one-click test of AI Max. Both are useful, but all channels default to high priority, so nothing changes unless you change it. --- From [DumbCMO](https://dumbcmo.com): The marketing notes you were too embarrassed to take.