When paid search is done correctly, it can deliver the best results for your advertising dollar. However, it can be quite challenging and requires careful selection of keywords and phrases, expert copywriting for ads and landing pages, and in-depth analysis and testing of results.

Mistakes can cost your company dearly in bottom line profits, so it is important to employ a series of best practices when developing pay per click campaigns. Here are nine steps you can take to vastly improve your PPC results:

1. Develop more 3, 4, & 5 word keyphrases.
   A good keyword program has a mix of single keywords as well as multiple work keyphrases. The reason for this is that single keywords are often less profitable because they cost more and have lower conversion rates. It is therefore crucial that you incorporate multiple keyword phrases that are less costly and higher in conversion. Although the exact percentage varies from industry to industry, you should aim to have at least 60% of your search traffic emanate from multiple word keyphrases. Also be wary of the higher priced and less relevant terms resulting from broad matching. Broad matching tactics are not a substitution for keyword development.

2. Write qualifying descriptive copy.
   Successful ads feature copy that brings qualified buyers to their landing pages. For example, if you run a high-end clothing boutique, your ad should target clients that are prepared to pay the high price associated with such luxury. An ad that includes general copy such as "wide selection of women's clothing" leading to a site selling high-priced clothing most people cannot afford would be misleading. Instead you should say, "Shop designer women's fashions," or some variation. Your ad copy should accomplish two things: a) encourage qualified customers to click on your ad, and b) discourage those who are not interested in your product or service. Keep in mind that you only pay the search engines when someone clicks on your ad, so make the click worth its price by using qualifying copy that results in conversion.

3. Send searchers to a relevant landing page.
   Today's experienced Internet users expect to find exactly what they want when they click on an ad. If they are taken to a website's home page, a broad category page, or worse, a totally unrelated page, they are likely to leave your site as quickly as they arrived. Analyze each keyphrase you are using and determine the best landing page your site has to offer the searcher. Regularly test all SEM links to ensure that they are bringing users to the appropriate web page. Make it your business to deliver a top-notch user experience to website visitors, which includes having well-designed, easy-to-navigate landing pages that communicate a clear call to action.

4. Don't rely too heavily on automated bid management strategies.
   Technology alone cannot bring you sales. Human intervention is imperative in the creation of a successful PPC campaign. You'll achieve the best results by using a bid management tool combined with the careful analysis and qualitative research that can only be performed by humans. Technology can be used to retrieve information, crunch numbers, and sort data. People should then analyze that information and data and make bidding decisions based on a clear understanding of the business.

5. Don't allow affiliates to bid on your branded products and company trademarks.
   If your company has branded products and trademarked items, allowing affiliates and resellers to bid on these terms can be a huge mistake. It can negatively impact your performance, raise marketing costs, and even reduce your sales. Instead you should make your affiliates sign a Rules of Engagement document that states they can bid on everything except branded terms. Then assign someone to monitor your branded search terms on all engines to ensure compliance.

6. Accept that the top listing is not always the best.
   Most companies assume that the top search engine position is always the best. However, it is more profitable to determine the position that yields the best volume and profitability. Top positions are the most expensive, and might not deliver the best ROI for you. If you can obtain the top position without paying through the nose, by all means grab it. But it is important to realize that other factors are involved here. Perhaps your product and pricing are better than that of the competitor listed above you. If that is the case your target audience will realize that regardless of your position.

7. Analyze what your competitors are doing.
   It is important to keep in mind that the actions of your competitors can directly impact your SEM performance. Identify who your competitors are and then devise a plan to monitor their search activities. Choose the top keywords that account for 80% of your PPC budget and closely monitor those every day. Then adjust your bidding strategy accordingly, taking advantage of bidding gaps and more aggressive opportunities.

8. Understand the differences between the major search engines.
   Not all search engines work the same way, and it is very important that you realize this when putting together a PPC campaign. For example, Yahoo treats the singular and plural forms of keywords as one, but Google requires you to submit keywords in both the singular and plural format in order to have visibility for each. In addition, some search engines have an open auction environment that allows you to bid into each position, but others have invisible bidding forums wherein your position and click price are determined via a relevancy score algorithm. Another major difference that exists is the set of copywriting rules that each search engine enforces. Each has its own unique character limitations and word restrictions that must be followed.

9. Watch out for click fraud!
   It's time to face reality. Click fraud is real, it can happen to you, and you should have a plan in place to deal with it. Search engines are constantly working to improve this situation, but the bottom line is that you must take steps to protect yourself against fake impressions, fraudulent clicks, "click pimping," and attacks by competitors. Put safeguards in place using reporting and analysis to uncover data that may suggest fraud is occurring. If you discover that you are the victim of click fraud, present your case to the search engine provider and be persistent in demanding refunds.

Pay Per Click Advertising

Pay per click (PPC) is an advertising and search engine marketing technique used on websites, advertising networks, and search engines. Advertisers bid on terms they believe their target market would type in the search bar when they are looking for a product or service. When a user types a query matching the advertiser's keyword list, the advertiser's ad may appear on the search results page. These ads are called "sponsored links" or "sponsored ads" and appear next to, and sometimes, above the natural or organic results on the page. The advertiser pays only when the user clicks on the ad.

While many companies exist in this space, Google AdWords, Yahoo! Search Marketing, and MSN adCenter are the largest network operators as of 2007. Depending on the search engine, minimum prices per click start at US$0.01 (up to US$0.50). Very popular search terms can cost much more on popular engines. Arguably this advertising model may be open to abuse through click fraud, although Google and other search engines have implemented automated systems to guard against this.

PPC engines can be categorized in "Keyword", "Product", "Service" engines. However, a number of companies may fall in two or more categories. More models are continually evolving. Currently, pay per click programs do not generate any revenue solely from traffic for sites that display the ads. Revenue is generated only when a user clicks on the ad itself.

Keyword PPCs
Advertisers using these bid on "keywords", which can be words or phrases, and can include product model numbers. When a user searches for a particular word or phrase, the list of advertiser links appears in order of the amount bid. Keywords, also referred to as search terms, are the very heart of pay per click advertising. The terms are guarded as highly valued trade secrets by the advertisers, and many firms offer software or services to help advertisers develop keyword strategies.

As of 2007, notable PPC Keyword search engines include: Google AdWords, Yahoo! Search Marketing, Microsoft adCenter, Ask, LookSmart, Miva, Kanoodle, Yandex and Baidu.

Product PPCs
"Product" engines let advertisers provide "feeds" of their product databases and when users search for a product, the links to the different advertisers for that particular product appear, giving more prominence to advertisers who pay more, but letting the user sort by price to see the lowest priced product and then click on it to buy. These engines are also called Product comparison engines or Price comparison engines.

Noteworthy PPC Product search engines include: Shopzilla, NexTag, and Shopping.com.

Service PPCs
"Service" engines let advertisers provide feeds of their service databases and when users search for a service offering links to advertisers for that particular service appear, giving prominence to advertisers who pay more, but letting users sort their results by price or other methods. Some Product PPCs have expanded into the service space while other service engines operate in specific verticals.

Noteworthy PPC services include NexTag, SideStep, and TripAdvisor.

Pay per call
Similar to pay per click, pay per call is a business model for ad listings in search engines and directories that allows publishers to charge local advertisers on a per-call basis for each lead (call) they generate. The term "pay per call" is sometimes confused with "click to call"[2]. Click-to-call, along with call tracking, is a technology that enables the “pay-per-call” business model.

Pay-per-call is not just restricted to local advertisers. Many of the pay-per-call search engines allows advertisers with a national presence to create ads with local telephone numbers.

According to the Kelsey Group, the pay-per-phone-call market is expected to reach US$3.7 billion by 2010.

Click-through rate or CTR is a way of measuring the success of an online advertising campaign. A CTR is obtained by dividing the number of users who clicked on an ad on a web page by the number of times the ad was delivered (impressions). For example, if your banner ad was delivered 100 times (impressions delivered) and 1 person clicked on it (clicks recorded), then the resulting CTR would be 1%.

Banner ad click-through rates have fallen over time, often measuring significantly less than 1%. By selecting an appropriate advertising site with high affinity (e.g. a movie magazine for a movie advertisement), the same banner can achieve a substantially higher click-through rate. Personalized ads, unusual formats, and more obtrusive ads typically have higher click-through rates than standard banner ads.

CTR is most commonly defined as number of clicks divided by number of impressions and generally not in terms of number of persons who clicked. This is an important difference because if one person clicks 10 times on the same advertisement instead of once then the CTR would increase in the earlier definition but would stay the same in term of later definition.

Account Dashboard - Although shocking at first, Yahoo's new account dashboard promises easier management and better visibility and control over your campaigns. Your new dashboard will feature a performance overview complete with graphs and a customized "watch" list of your top campaigns.

Ad Activation - In what might be the most attractive new feature for Yahoo's PPC clients, ads will go live within three to five minutes instead of three to five business days as was standard on Yahoo's old platform.

Ad Testing - Advertisers on Yahoo will now have the ability to test drive their advertising messages in order to improve the quality of their ads. This means you can easily determine which messages perform best with your target audience.

Geo-Targeting - Yahoo now allows advertisers to target by location, narrowing ad distribution to cities and surrounding areas. When done correctly, this can help improve your ROI.

Campaign Scheduling - With the promise that you'll more efficiently manage your ad spending, Yahoo now offers users the ability to control the timing of their campaigns with optional date scheduling.

Ranking - In the same way that Google's AdWords works, Yahoo will now factor in the ad's quality as well as the bid amount. The old system awarded the highest position to whomever paid the most for it. Now they will consider how well the ad actually performs along with actual bid amount for each ad.

Ad Groups - Keywords can now be grouped according to a common subject, so that keywords in groups can now be served with multiple ads. Hopefully Yahoo is right and this will save advertisers time setting up and monitoring their campaigns.

Reporting - Instead of pre-defined reports, Yahoo now offers reports that are customizable in order to deliver marketers more information that really matters to them.

After a rough go in 2006, obviously Yahoo's intent is to make their pay per click advertising program more attractive and easier to use for advertisers, thereby retaining its current client base and attracting new ones. Panama's initial announcement pleased investors, but is it enough to pull Yahoo out of the woods? We'll just have to see what the outcome of 2007's transition period brings.