Keep People Clicking

Most keyword advertising services operate on a bid model. Any company can specify how much it is willing to pay (which could range from less than a cent to several dollars) for a small text ad to appear on a given search result. That fee is charged if the user clicks on the advertisement, providing a more straightforward measure of relevance than broader brand advertising tactics.

Providers offer online tools that outline the popularity of different search terms to help businesses select the best keywords. "It all starts with taking a good look at your business and understanding what prospective customers will be searching for, and developing a keyword strategy around it," says Craig Wax, managing director for Yahoo! Search Marketing.

"We're still doing pay-for-click advertising on the major search engines," Druce says. "When we started, we had a very low budget, we were spending $600 a month on the major search engines, and we've had to increase that consistently." OZtion now uses an external agency for this as well: "It got to a point where it was too hard to handle. Initially, it was done in-house and it was taking quite a lot of time to look at keywords and bids."

Experimentation is essential, though experts point out that this needn't be expensive. "One of the beauties of search marketing is, no contracts and complete flexibility. You can turn it on or off at a moment's notice," Wax says. Most services will allow you to set an upper monthly budget, ensuring that you don't get hit with an unexpected bill if a particular advertising campaign proves wildly popular.

Measurement is also fairly straightforward. "Cost-per-click is still a good measure," Wax says. "If you pay $1 per click, it's easy to see if you're making money.

"A common mistake is not putting a lot of thought into where you send the person who clicked in the first place," Wax says. "You have to make sure that the landing page is relevant to the search term you bid on, and there's a clear next step and call to action."

Another warning is not to bid too much money on individual keywords. Highly competitive terms (especially prevalent in areas such as travel and electronics) may attract bid rates so high that getting an effective ROI can be impossible.

If your business occupies a unique niche, however, selling via keywords can be very successful. "Keywords are still the best tactic for us," says Marc Lehmann, CEO of Australian online accounting software developer NETapplica. "Google is our number one salesperson."

Electronic Marketing Restraints

While electronic marketing offers new opportunities, it isn't a world without boundaries. This year's introduction of the Do Not Call register, combined with existing protections, means that businesses must tread carefully in all communications with customers.

The Do Not Call register, which is scheduled to go into operation in May 2007, allows consumers to opt out of receiving all telemarketing calls. Businesses will be responsible for ensuring they don't place calls to individuals listed in the register, unless they already have a business relationship with that customer. Codes of practice for this were still in development at the time of writing.

Businesses also need to be mindful of the Spam Act, which has been in place since April 2004 and carries potential penalties of up to $1.1 million for violations. Under the act, it is an offence for an Australian business to send unsolicited email. Again, businesses may send messages with customers who have explicitly signed up for electronic communications, or with whom they have an established business relationship.