Many Search Engines have now started offering paid placement programs in addition to their already existing programs. When someone searches for a specific term, the listings show up in the order of highest bidder first, second highest bidder second and so on. If two companies bid the same amount, the first bid gets priority for the listing and will be listed first. Such programs are called Paid Placement Programs or Pay-per-click programs. You only pay when someone clicks on your listing and is delivered to your website.

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• Search Engine Marketing campaigns are effective for increasing web site traffic quickly.
• Pay-per-click programs will allow you to quickly test the ability for your web site to convert visitors to a call to action or make a purchase.
• You will be able to identify which keyword phrases will provide the best conversion rate.
While ordinary search results frequently include links to non-working pages, home pages with irrelevant content and filler listings, paid search content ensures a user will gain quick access to relevant sites of interest. Since each listing is displayed by either a keyword search or relevant text link, you are ensured only visitors with interest are being sent to your site. Thus, pay-per-click programs offer a more targeted approach.
The most prominent and successful Paid Placement programs are Google Adwords and Overture.
In 1998, Overture was the first to charge advertisers to be listed in its search results. Now, all the major search companies have jumped in. So-called paid-search revenue grew 40% last year, to $1.4 billion. It’s now up to 23% of the $6 billion Net advertising market, which shrank 17% last year, according to analysts’ projections.
Placing ads near search results offers the simple appeal of the Yellow Pages, but with different economics. Overture made $78 million last year on $668 million in sales, about half of the paid-search market. That’s more than Yahoo made on $953 million of revenue, largely from traditional online ads such as banners. Paid search also pushed search specialists LookSmart Ltd. and Ask Jeeves Inc. into profitability in the fourth quarter. And the biggest potential initial public offering of an Internet company this year is Google Inc., which began offering pay-per-click search last year. Search ads will make up the lion’s share of Google’s revenue, estimated at $350 million to $400 million.

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Google offers a paid placement program called Google Adwords. Paid listings in Google appear above and to the side of its regular results. Like most Paid Placement or Pay-per-click programs you are charged a fee only when a visitor clicks on your listing. There is a $5 activation fee for this service and there is no monthly minimum fee.
Some advantages of Google Adwords are:
• Your price is automatically lowered to one cent more than your closest competitor.
• No one can lock in the top position because user click through rates and CPC determine where your ad is shown. The most relevant ads rise to the top.
• Google offers a unique set of tools to forecast your budget and select target keywords.
• You can target your ads to users in a specific country or only to speakers of a specific language.

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• Competitive Pricing: AdWords Discounter automatically monitors your competition and lowers your CPC to one cent above theirs.
• Ranking: Rank is determined by combination of CPC and click through rate. If an ad is irrelevant to users, they won’t click on it and it will move down the page. Your relevant ads will rise, at no extra cost to you.
• Campaign Management: Multiple ads per keyword. Google tracks individual ad performance to help you monitor which ones perform well. AdWords Discounter takes care of your campaign for you, dynamically raising and lowering your CPC within the range you specify to keep you in the position you want.
• Timing: Ads go live almost immediately once you create them.
• Minimum Deposit to start: $5.00 total startup cost
• Monthly Minimum Fee: None
• When Billed: Billed only for clicks received, after they’re received.
• Budgeted Delivery: Set daily budget for your campaign. Continuous delivery each day over the time period at that level.
• Target by Country or Language: You choose who should see your ads from among 250+ countries and 14 languages.
• Tools: Enhanced keyword tool suggests other phrases AND most popular synonyms based on billions of searches. Results in better targeting and higher click-throughs.
• Ad Groups: Set a maximum price for an individual keyword or a group of keywords.

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This is a very recent tool from Google that has been earning rave reviews from experts all over. This tool focuses on a relatively new concept of marketing known as Contextual Marketing.

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This is a newly emerging but extremely targeted and effective form of promoting your online business. Consumers download specific software from a contextual marketing network organizer at no cost and install it on their desktops. When the consumer is about to make a purchase for a specific product or service or is placing a search query for that item, the software will beam advertising messages from suppliers of that product or service, offering some incentive to the consumer such as discounts or promotion offers. Through this facility, the advertiser (supplier) is getting an opportunity to promote his offering to a targeted consumer and that too at the point of sale or when there is an intention to buy. Thus contextual marketing offers a highly targeted marketing tool that connects the supplier with a genuine lead and spurs transaction.
The effectiveness of contextual marketing can be seen from the fact that response rates and conversion rates are from 5 to 20 times higher than the results from conventional online advertising.
Here’s how Google AdSense applies this concept.
Google AdSense is a fast and easy way for website publishers of all sizes to display relevant, text-based, un-obtrusive Google AdWords ads on their website’s content pages and earn money. Because the ads are related to what your users are looking for on your site, you’ll finally have a way to both monetize and enhance your content pages. The program is free, and Google pays you for clicks on the AdWords ads on your site.
There are no strict criteria for acceptance into the AdSense program, which, unlike other ad networks, does not place minimum traffic requirements on applicants. The only real criteria are the standard “acceptable content” requirements that exist just about everywhere. Of course, AdSense wants to attract quality content sites, and will only allow AdSense members to serve one ad per page – the service can’t be used for both banners and skyscrapers.
Once you’ve been accepted, you’ll be able to run AdSense advertisements on any site you own using the same ad code, provided you obey the guidelines. Reporting doesn’t occur in real time, but is updated regularly throughout the day. Currently, you cannot view reports based on a domain or site basis if you run the ads on more than one site.
This is what Google says about what makes AdSense different from others
This innovative new Google business solution will help you unleash the true revenue potential of your site.

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• AdSense is simple to join without any entry costs
• No technical skills required. Just a few lines of code to be copy pasted
• Only ads relevant to your content appear
• AdSense automatically shows appropriate ads for different sections. So it saves great deal of time and energy searching for relevant advertisers for different sections
• You’re free to concentrate on providing good content and Google does the work of finding the best ads for your pages
• You can filter up to 200 URLs, so you can block ads for sites that don’t meet your standards. You can also block strong competitors
• Access base of 100,000 advertisers AdSense disadvantages
• Low flexibility ~ Unlike other advertising sites where you can choose your advertisers and make choices on basis of payout, display and frequency, AdSense proves to be pretty inflexible.
• Free advertising — The ad panels say “Ads by Google” – free advertising for Google. You don’t earn anything if someone clicks on that link.
• You can filter out 200 URLs. For big sites this figure is not adequate
• Minimum payout is $100, which is fair enough for most webmasters but keeps the smaller ones out.
• Revenue sharing isn’t disclosed by AdSense. Considering Google’s reputation maybe it can be trusted, but such disclosures especially with regards to revenue sharing should have been made.
Very recently, the company added new features to Google AdSense, including preset color palettes to coordinate colors for the Web sites and the ads, automatic user feedback mechanisms, and reporting tools that tell participants their click-through rates and how much money they’ve made at any given time.
Current AdSense participants include the Food Network, Weather.com, ABC.com, Internet Broadcasting Systems, Lycos Europe, New York Post Online Edition, Reed Business Information, US News & World Report, and iVillage.

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