Keywords
Search advertising is sold and delivered on the basis of keywords. The user of a search engine enters keywords to make queries. A keyword may consist of more than one word.
Search engines conduct running auctions to sell ads according to bids received for keywords and relative relevance of user keywords to ads in the inventory. The keyword “home mortgage refinancing" is more expensive than one that is in less demand, such as “used bicycle tires.” Profit potential of the keywords also plays into bids for ads that advertisers want displayed when the keywords are searched by the user. For example, "used book" may be a popular keyword but may have low profit potential and the advertiser bids will reflect that.
Search engines build indexes of Web pages using a Web crawler. When the publisher of a Web page arranges with a search engine firm to have ads served up on that page, the search engine applies their indexing technology to associate the content of that page with keywords. Those keywords are then fed into the same auctioning system that is used by advertisers to buy ads on both search engine results pages. Advertising based on keywords in the surrounding content or context is referred to as Contextual advertising. This is usually less profitable than search advertising which is based on user intent expressed through their keywords.
Advertisers can choose whether to buy ads on search result pages (search advertising), published content pages (contextual advertising), or both. Bids on the same keywords are usually higher in search advertising than in contextual advertising.
Read more about this topic: Search Advertising