The major search engines - Google, Yahoo (a directory as well as a search engine) and MSN - generate "natural" or "organic" search results or listings, as well as sponsored (advertiser paid) listings, whenever someone performs a search on particular keywords or keyphrases. As you might imagine, listings that appear on the first page of results - whether paid or organic - tend to attract the vast majority of clicks on the links included in their listings and, consequently, traffic to their websites. Therefore, if you know that the target market for your website typically uses particular keywords or keyphrases to search for the kinds of information, products or services you offer... you want your listing to appear as high as possible in the search engine ranking pages or "SERPs".
Is the very first position on the SERPs the best position to have? Well, opinions vary. Many search engine marketers believe that the top spot on the free listings is the best... but not necessarily believe that the top spot on the paid listings is as profitable as, say, a couple of spots down. Ideally, in as far as the paid listings go, this is something you should test.
Since SEM incorporates both paid and free search engine rankings, the means of getting high up in the free versus the paid results necessitates a somehwhat different methodology. Search engine optimization (SEO) is how marketers get their websites and webpages ranking highly in the free results. This is part-science, part-art. The SEs use complex math to rank different sites and pages. Therefore, if you understand how this math works, then, presumably, you'll know what to do to get a high ranking. Trouble is, no-one knows how this math works! The SEs keep their algorithms close to their chests. Consequently, it's a bit of an art to try to work out the science!
Meanwhile, paid search incorporates pay-per-click advertising and pay-per-impression advertising.
Pay-per-click (PPC) advertising is as the name suggests: advertising where you pay each time someone clicks on the link in your ad. Some of the major advantages of PPC are that you only pay for the results you want - prospects clicking on your ad - and you can readily measure the effectiveness of a given keyword or ad by means of the click through rate (CTR).
The other form of paid search is pay-per-impression, where you pay a certain amount per 1,000 ad impressions (CPM). Google, in fact, uses a formula to determine how much you ultimately pay for a given advertising campaign that incorporates both the cost per click (CPC) and the CPM. I won't get into the complexities here, but suffice to say that you can end up paying the same amount of money regardless of whether you pay based on a click or an impression, depending on your CTR. Also, Google actually favors ads with a higher CTR and takes that into account when ranking them. So you can actually get a higher listing and still pay the same per click than someone else, provided your ad is more effective for that keyword or keyphrase in question.
Paying to appear in the SERPs can be a good way to get started in SEM. You can identify which words are the most effective in pulling customers to your website. You can test the popularity of a new product or service. And you can test the layout and copy on your landing pages (the specific pages that people see when they click on your listing).
Search marketing is well worth pursuing if you're serious about building a web-based business. But given the work involved, that does NOT mean that YOU need to manage all your search marketing efforts. You can always hire individuals or companies to optimize your webpages for SEO purposes, or to run your PPC campaigns.
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