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Search Engine Marketing, also known as SEM, is marketing via the internet to promote a website for better search engine results. This is done by many ways such as PPC ads (pay-per-click), paid advertising on other websites, contextual link advertising etc.
In short, think of search engine marketing as just what it is... marketing online, but the focus is on getting the attention of search engines rather than the attention of people. Search engine marketing done correctly can make a websites rankings grow fast and have a long lasting effect. Search engine optimization and search engine marketing go hand in hand when it comes to website promotion.
Search engine marketing is like any other type of marketing but with slightly different ways of doing it. With search engine marketing you are marketing your website just like you would market a business location, product or service, only your goal is to let the search engines know where your website is located. Search engine marketing can be an exhausting and timely procedure, even if you know what you're doing. I will mention a few forms of search engine marketing and give you some information on each.
Pay-per-click (PPC) advertising can be costly if you're not careful, and you have to keep a close track on PPC ads or else you can easily spend hundreds or even thousands of dollars and still not get the results you want. PPC is like an auction of keywords and key phrases. You bid against other websites for each keyword or phrase and who ever bids the highest wins the top ad placement in the search results. If you've ever been to an auction you have seen how the prices can jump sky high in a matter of minutes, PPC is no different. The trick to it is that you have to choose your keywords carefully and know how not to over bid for placement. If a specific keyword is to high in price then use that keyword in a phrase and target that phrase instead. The cost for the phrase may be lower than the keyword itself, but you can still win placement.
Paid advertising is another form of search engine marketing, and another potentially dangerous and expensive method if not done correctly. There are two ways to do this, one is the internet and the other is print publication which includes magazines, billboards, newspaper ads and so on. Both ways of paid advertising is a good source of getting people to your website but the internet is what I will talk about here. These are called "inbound" or "referring links" which are links that are posted on other websites that direct people to your website. These links are usually acquired by a form of payment to the referring website that you would negotiate with the owner of that website. Sometimes a link exchange agreement can be made where both owners agree to post referring links to each other without any payment to be expected. This can be a mutual benefit to both websites.
It is very good to have your website listed and linked to from other websites but those websites must have good rankings in the search engines. These are called inbound links from "referral websites" and they also must be content related to your website for the proper effect. The higher the ranking of the referral website, the better it looks for yours. If the referring website has little or no ranking, then it doesn't help you much but every little bit helps. The most important thing to remember here is that the referring website has to be content related, meaning their business relates to your business. Non-content related referring links will hurt your website in the eyes of search engines, and possibly get your website banned in search engines.
These are just a few main examples of search engine marketing. The bottom line is that the more you advertise your website the more it will advertise you. The returns of your investment in marketing your website are far greater than the cost an effort you put into it... if it's done right.