your ad is shown on the screen of others when people search for the product or service that you are offering. When you make an ad then you add some keyword according to the product or services you are offering to customers.and when people search that keyword then it vibrates and googles start showing add to the people .in this way its whole model works .people asked their query and it shows relevant add according to them.

The Google AdWords auction is mainly focused around keywords that is advertisers choose a list of keywords to target which are relevant to their business offerings, these words which people are most likely to use when searching for their product. Then they bid on these keywords, basing each bid on how much they are willing to pay for Google user to click on their ad. This bid, combined with a Quality Score assigned by Google which is based on the quality of our proposed ad, determines which Google ads appear on the SERP. When users click on the ads, the advertiser pays a certain cost (the cost per click, or CPC), which is calculated according to the formula:

This is where the term Pay-Per-Click (PPC) originates.