Search engine marketing can be broadly divided into two main categories – search engine optimization and paid search placements. Both methods have a place in a company’s overall online marketing strategy, but one or the other may be more suitable for a particular situation. Each also has its own unique set of costs, benefits, and challenges.

Search engine optimization (SEO) can be viewed as the more organic approach to search engine marketing. SEO involves a set of tactics aimed at improving how a particular site performs for a specific set of relevant key terms. These tactics are targeted toward the key elements utilized in a search engine’s search algorithm. For instance, Google’s search algorithm utilizes a number of weighted factors to determine where a site will appear within the search results for a particular term. These factors include where the term appears on the page, how often it appears, the context within which it appears, whether it is in the TITLE and META tags, how many other sites on the same topic link to it and how important those sites are, how often when a search is performed for that term does the user click on the listing, etc. What the specific factors are and how they are weighted varies over time as the algorithm is tweaked in an effort to produce the most relevant list of sites possible. Most other major search engines use similar factors.

SEO is preferred by many marketers as they feel that users will see the organic search results as more valid than a sponsored listing. Whether that is true or not is a separate debate. The problem with SEO is threefold – it takes a great deal of time to generate tangible results, the process is quite manually intensive, and there are no real guarantees regarding where the site will appear on the list for any given term (SEO is as much a form of art as it is a science). The reason that it takes a significant amount of time is due to search engines’ indexing schedules (how often they revisit sites to analyze the content) and the trial and error process inherent to this method. Another problem with SEO is that many sites are dynamically driven and search engines have a difficult time handling such sites.

Paid search placements, such as those offered through Overture (which is currently being re-branded as Yahoo Search Marketing Services) and the Google AdWords program, are an excellent way to ensure that a site appears on the first page of results for specific terms. Overture results appear on many major search services including (but not limited to) Yahoo, MSN Search, Excite, Lycos Europe, and Infospace, as well as content sites such as CNN, Wall Street Journal, and ESPN. Google’s AdWords placements appear along side their normal search results and on various content sites across the Web. The ranking within these sponsored listings areas is determined based on a straight CPC bidding system for Overture, and by a somewhat similar system that also factors in how often the ads are clicked when presented for Google.

Both programs are sold on a CPC basis, so advertisers only pay when a searcher actually clicks on the listing, making the ROI quite easy to track and manage. Unfortunately, this also means that funds must be constantly invested to keep these campaigns running. Paid search programs are also comparatively quick as compared to SEO – while SEO can take months, paid placements can be live within just a few days. But, as mentioned above, some marketers also worry whether users view these sponsored listings less favorably than normal search results.

The bottom line is that most online marketing programs should include both of these options to some extent. Depending upon the purpose of the site, the goals of the marketing program, and the time available for garnering results, one or the other may deserve a greater focus.