In Internet marketing, search advertising is a method of placing online advertisements on web pages that show results from search engine queries. Through the same search-engine advertising services, ads can also be placed on Web pages with other published content.
Search advertisements are targeted to match key search terms (called keywords) entered on search engines. This targeting ability has contributed to the attractiveness of search advertising for advertisers. Consumers will often use a search engine to identify and compare purchasing options immediately before making a purchasing decision. The opportunity to present consumers with advertisements tailored to their immediate buying interests encourages consumers to click on search ads instead of unpaid search results, which are often less relevant. For the online user, Sponsored Search Advertisement offers highly relevant search results which are based on the consumer’s own queries and, thus, they are considered less intrusive than banner advertisements or pop-ups advertising. In addition, Sponsored Search Advertisement reduces online user search costs and increases the accessibility to useful information within a limited time frame. Consequently, Sponsored Search Advertisement has become an important element of online users browsing and information searching experiences on the Web. Search advertising is an alternative to SEO and SEM.
Web advertising before 1998 consisted of banner advertisements generally priced by the number of impressions delivered (i.e., Cost-Per-Thousand (CPM) pricing). GoTo.com (renamed Overture in 2001, and acquired by Yahoo! in 2003) created the first sponsored search auction, and Google’s first sponsored search auction followed in 2002.
Search advertising is sold and delivered on the basis of keywords. The user of a search engine enters keywords to make queries. A keyword may consist of more than one word. The user interested in the product or service searches using a specific keyword or search term which lets them interact with advertiser's website.
Search engines conduct running auctions to sell ads according to bids received for keywords and relative relevance of user keywords to ads in the inventory. The keyword “home mortgage refinancing" is more expensive than one that is in less demand, such as “used bicycle tires.” Profit potential of the keywords also plays into bids for ads that advertisers want displayed when the keywords are searched by the user. For example, "used book" may be a popular keyword but may have low profit potential and the advertiser bids will reflect that.