... to maximize CPM of its advertisers, also on Search (while maintaining reasonable relevancy, and without braking any law on the way ). As EssayMaster put it: CPC=CPM/(1000xCTR%) , or CPM = CPC x CTR x 1000 Also: Advertisers cost = AdWords+Partners revenue This is why they encourage the search advertisers to increase their CTRs (or bid higher). Google is the publisher and its asset is the impressions, not the clicks. The first big PPC Search player was Overture, which was bought by Yahoo. Their first model was whoever bids higher (CPC) gets the higher position, while ignoring CTR. That model turned to be less profitable than Google's, so Yahoo (YSM) copied from AdWords. Bottom line: You think you're paying per click, but effectively/actually you're paying per impression, also on the Search network.