Small businesses can’t afford to waste a ton of money advertising to audiences that may or may not be interested, which is why pay per click (PPC), a highly targeted form of advertising, has become increasingly appealing to them. “Pay per click” means just that, you only pay when someone actually clicks on your ad.

PPC advertising is most often found on search engine results pages, appearing under the heading “sponsored links” or “sponsored ads,” usually above or to the right of organic search results. As the advertiser you have the ability to choose the keywords or phrases your ad will show up for on the search engine. For example, if someone types “pet supplies” into a search engine and that also happens to be one of your chosen terms, your ad may show up. Where and when your ad shows up, however, depend on your bid (that is, if you’re advertising under a bid-based PPC provider like Google AdWords or Yahoo! Search Marketing).

How this works is you bid against other advertisers for a certain keyword. The highest bid gets the top spot. The second highest bid gets the second spot, and so on. The amount for a bid can range anywhere from mere pennies to more than $20 per click. It’s just a matter of competition.

The key to an effective PPC campaign is identifying the search terms that convert most frequently for your particular site and will provide the greatest return on your investment. The tough part, however, is that this requires a ton of supervision. You must always be watching which terms are getting the job done and which aren’t, and then tweaking your bidding habits accordingly. One way to avoid overpaying is to use daily limit controls for the amount you spend. This means that your account can be cut off after a certain budget has been reached each day.

PPC is a great way to build your small business on the Web. By continually perfecting your PPC efforts, you’ll be able to maximize the return on your investment by targeting an audience that is looking for products and services like yours at the exact moment they are looking for them.

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