Search Engine Marketing: The Power of Pay-Per-Click Advertising

You don't buy search advertising the way you do display advertising -- and therein lies its advantage. Most ads are priced by standard rate cards, based on an estimate of how many people might be exposed to the ad. But when you advertise on search sites, you only pay when your ad gets a response.

Search engines charge you based on how many people click on your ad. For this reason, it's known as cost-per-click (CPC) or pay-per-click (PPC) advertising.

For an overview of search engine marketing, or SEM, read What Is Search Engine Marketing?

You'll find variations on the PPC model, as publishers look for new ways to lure your ad dollars to their sites:

• Cost-per-lead: In the cost-per-lead model, you pay for each "lead" or potential customer you get from the ad. You can define what a true lead is. For example, a lead might be someone who signs up for a newsletter, or who actually buys something. This model reduces your advertising costs, because you don't pay for people who clicked on your ad but weren't really interested in your site.
• Cost-per-action: This is a variant of cost-per-lead, wherein you define which consumer actions you're willing to pay for. Actions could include registering on your site, visiting more than one of your Web pages, or filling out a form.
• Revenue sharing:: Instead of paying for ads, you might make a deal with another site in which you give them a percentage of any sales they send your way. This is as advanced form of Internet marketing that requires robust back-end software.
• Cost-per-call: This newer service is available from several search providers and business listing services. When a potential customer clicks on your ad, instead of being sent to your Web site, they're connected to your business phone. You can determine the hours during which your cost-per-call ads appear, so that customers don't go to your voice mail. It's also a handy service for businesses that don't have Web sites.

In addition to showing your ads in search results, many search providers let you opt to have your ads show up on partner Web sites. These so-called "contextual ads" are matched, to a greater or lesser degree, to the content of the partner's Web page.

But remember: Your real goal isn't to get people to click on your ad, it's to convert them to customers. You need to make sure that when they arrive at your site, it's clear that they've found what they're looking for. To learn how to create landing pages that sell, read Landing Pages That Land Business.

You buy PPC advertising by bidding for your cost and placement using automated Web applications. We explain the basics in What Is Your Cost Per Click?