When you purchase ads on a search engine, how you choose your keywords and bid for them is important. If you sell gifts for Christmas, you can select Christmas as one of your keywords -- but your ad may show up when users search for "Christmas stocking," "Christmas cards" and "Christmas games." Those would probably not be good investments for you because they don't necessarily target the people who will buy from you. It will be a much broader audience.

Instead, try to narrow your search as closely as you can for your specific product or service. For instance "HO model cars" and "Poinsettias in Pittsburgh" will attract a specific type of buyer that may be more in line with your offering. A well-targeted keyword selection will keep your cost of clicks down.

Once you've determined which keywords make the most sense, you need to compete for those keywords. Google and Yahoo! Search Marketing both give priority to the ads with the highest bid for specific keywords. If you want your ad at the top of the list, you need to bid more than the next highest bidder for those words.

But having the highest bid doesn't always mean the most profitable ad for you. The top spot may cost you twice as much as the No. 2 position for a specific keyword, and only get you 25 percent more clicks. (The numbers differ from keyword to keyword.)

So you'll need to experiment. Start by trying to get the top position -- or another predetermined position -- based on how much money you can make each time a person clicks through and buys your product or service. More expensive products and those that attract repeat buyers could command higher bids than an inexpensive product only purchased once.

Then monitor and evaluate the campaign frequently (as shown in the other sidebar), and adjust your bids accordingly to maximize your profits.

The search engines provide self-service tools to make it easier to find keywords, figure out what people are bidding and determine what your costs will be. But you have to be willing to use them constantly to get the most from your search engine advertising.