So, what is search based advertising and why is it such a big deal?

[poundinlex]

I need a good explanation of how search based advertising works.

[S k]

There are two different aspects to search based advertising.

Search Engine Optimization (SEO): This involves editing a website's html files to place commonly searched keywords in the body copy, image alt tags, title, and various other places. The goal of SEO is to make your page more visible and appealing to search engines so that your page will rank higher. This is a long term approach to search based advertising.

Pay-Per-Click (PPC): PPC campaigns are short term advertising campaigns designed to get your webpage into search results more often. Google's sponsored links and the ads on a Facebook page are both examples of PPC campaigns. Ideally, they are targeted by demographics and common key words relating to your subject. They are a quick way to do search based advertising, but are generally less effective than SEO since people are less likely to click on a sponsored link than an organic link.

If the time and funding is available, it is best to perform both SEO and PPC at the same time. Combining both is sometimes referred to as Search Engine Marketing (SEM).

[382]

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[jwserra]

I would only like to add to SK's answer...
Search Engine Optimization: You mentioned on page factors, but the off page factor is very important. For the most part the off page consists of a link building strategy. You must have a link building program to achieve any success.
PPC: I wouldn't say that PPC is short term. I would say you can achieve faster results. The minute you start paying, your ad starts showing up.
PPC is faster, but SEO provides much more traffic once you achieve a top of first page listing.