SEM, or Search Engine Marketing, is the use of adwords on search engines to drive traffic to your site.

All major search engines allow anyone to buy advertising in the form of short text advertisements. The user doesn’t pay unless someone clicks upon the ad and therefore goes to the advertiser’s site.
 
In the screen grab from below, you can see that the text ads that appear at the top and the right hand side are called Sponsored Links. The text that appears in the middle left is called natural search results.

The way it works is that the advertiser selects the key words or phrases that, if typed into a search, they want their ad to be displayed against. These ads are displayed in the Sponsored Links section.

In the example above, the user did a search for “homes for sale in Sydney” and the three ads displayed at the top left and all those on the right hand side are paid for. The rest are there for free as the result of the search that the user requested.

Now the advertiser gets to select where the ads appear and how much they want to pay for the advertisement. The search engine then takes all the requests for ads against the keyword or phrase and then puts the highest bids at the top. Therefore it is possible to bid for keywords and not appear in the sponsored links as you may have been outbid. The search engines also have some other criteria they use but price is the key driver in determining position.

The smart SEM operators don’t go for the obvious keywords or phrases as they will be expensive to secure. What they do is construct thousands of keywords and phrases that are not commonly typed and therefore they are able to secure these for cheap cost per click rates. This is called ‘chasing the long tail’.

To implement keywords is very easy. Each search engine has a self serve section (e.g. ) where you can select the key words you want, the amount you want to pay, and then you enter your credit card and away you go. Of course if you don’t want to do this all yourself there are providers out there that can manage SEM campaigns for you for a fee.