Google Adwords is the most sophisticated and popular pay-per-click advertising system on the internet. Unlike regular search engine listings, which are listed for free according to "relevance," as defined by the particular search engine involved, Adwords are small text ads which usually appear to the right of the unpaid listings.

Advertisers bid on specific "keywords", which determines where the ad is displayed. However, unlike other search engines, where placement is completely determined by the amount of the bid, Google uses a complex calculation which also takes into the account the popularity of the ad as well. Thus, an ad which gets clicked on a lot can end up in a better position than one with a higher bid. That's how Google rewards the ad for relevancy, so it pays to create an ad that will invite clicks.

Advertising with Adwords has many advantages. First, the ad is displayed immediately, as opposed to waiting for sites to show up in regular listings, which can take months. Second, they can be highly targeted, meaning you can make sure you're only paying for clicks by customers who are sincerely interested. Third, Adwords allows you to run several ad campaigns simultaneously, so you can test the results and experiment on the fly to constantly improve the quality of the ads. You can even track the "conversion rate," or the actual number of sales generated by a given ad. This is extremely precise marketing.

The first step is to come up with the best possible list of keywords. This is extremely important, because if you bid on the same ones everyone else is bidding on, you will end up with very expensive clicks. You can use any of the many keyword search tools available on the internet to determine which keywords have lots of searches but not too much competition.

If you bid on enough low-cost keywords, you can do as well or better than if you had placed an expensive bid on a popular term. You can also place a limit on your budget, so that you can control how much your total expenditure is per month. You can also specify certain words you do not want included, so that you don't attract a lot of clicks from people looking for something related that you don't offer.

The ad itself consists of four lines: a title of no more than 25 characters, a description with two lines of up to 35 characters each, and a line for your url, also limited to 35 characters. The title is what really attracts attention. It should include the keyword you're targeting, and should be as striking as possible so as to stand out from the crowd. If it's truly attention-getting, it could end up getting more clicks than other, duller ads higher up on the page. Some suggest that it should be in all caps, and include a price if possible.

The description should include the major selling point of your product, and also include enough information to discourage clicks by unqualified customers. Make sure they know what you're selling and what to expect, as well as what sets you apart from the competition.

Finally, make sure the URL listed takes them to the most relevant page in your site for what they're looking for. Make sure the link is up to date and functioning correctly.

That's it in a nutshell, although the nuances are quite a bit more complex than we can deal with here. Many resources are available on the net which go into greater detail. But now that you understand the basics, you should be armed with the information you need to explore one of the most potentially lucrative marketing tools on the internet.