search engine Google and you’ll see what I mean. Google sells ads on the right hand side of the page and above the “regular” search results; they are labeled as sponsorships or paid ads. These spaces aren’t always taken, but they are available to the highest bidder. Today we’re going to talk about how keyword ads work from the buyer perspective. There are two main vendors for search engine keyword ads: Google and Overture, who sells space for a consortium of search engines such as MSN, Yahoo and others. (They are like the Coke and Pepsi of the soda world, and like the soda world there are some fine Fresca options too, but today we’ll keep conversation to the biggies.)

Google and Overture sell keyword ads. These are text-only ads that appear when a searcher types in the keyword terms you (the buyer) have selected. There is no charge to appear (that appearance is called an impression); you are only charged when a searcher clicks on your ad to go to your site.

There is no set price for a keyword ad. You determine how much you will pay for each click and you bid against others who want the same terms. The cheapest bid you can place is $.10; the price takes off from there. (For example I know that the term “laser etching” goes for more than $3.00 per click.) The more competitive the industry is, the more expensive the top ranking is. While, Google and Overture make it fairly easy for their buyers to determine the going rate for a keyword term, it’s not always as easy for others to find it.

There is an expectation that you (the ad buyer) will spend a certain limit each month. Google has a set amount they will charge you per month regardless of clicks; Overture will ask that your ad receive a certain percentage of clicks per impressions or they will pull your individual ads. Both services seem to be OK if you spend at least $20 per month. Each service allows you to pre-pay or be billed for the service. And each is pretty good at letting you pre-determine limits, either by day or month. Once your limit is reached, your ad will no longer be shown for that day or month.