Imagine if you could advertise ONLY to people who have actually expressed an interest in doing business with you? That’s basically what happens whenever a prospective customer or client types a phrase into a search engine that’s relevant to your business. But how do search engines decide which sites are worthy of top placement in their search results? It turns out that some of the results are ranked by the search engine’s computers while others are simply paid advertisements from companies willing to buy their way to the top using Pay Per Click Advertising.

Pay Per Click Advertising (PPC for short) is an online advertising format that allows you to buy your way to the top of search results pages for search phrases relevant to your business. Businesses buy advertising on specific search phrases, and are then charged each time a person clicks through to their web site.

How does this work?

Try running a search on a major search engine like Yahoo or Google for a common consumer product like “DVD players.” When reviewing the results, you’ll likely see a set of results labeled as “Sponsor Results” or “Sponsored Link”. Some results may appear in the same format as the main search results on the page, while others are listed within colored text boxes along the site of the page. All of those results are paid advertisements from the sites listed within the ads.

The ads are ranked based on how much a business is willing to pay to advertise on each search phrase. In the example search for “DVD players” the current top advertiser is currently paying $0.81 per click – one penny more than the #2 advertiser.

The ads are purchased through pay per click advertising suppliers, and the two largest happen to be owned by Google and Yahoo. Google’s program is called Adwords and displays results on

Ed Kohler is the President of Haystack In A Needle, Inc., a web marketing firm in Minneapolis, MN, offering search engine optimization and pay per click advertising consulting services.