1. Choose your keywords
Think like a customer with a need when choosing the keywords you will use to advertise your business. Try not to be too general, but select words that customers are likely to use when searching in your niche. Use search engine tools (such as Google's Keyword Tool) to learn what keywords or phrases are likely to bring the most traffic to your site.
2. Make a bid
When you bid through an auction on keywords, remember that pricing is driven by supply and demand. Popular keywords cost more and that's why you need to focus on what differentiates you from your competitors when selecting your words.
3. Select your monthly budget
Decide on the maximum amount you will pay each month for click-throughs to your website. Once that amount is reached, your ad will stop appearing. For example, if you pay $0.50 per word and select a budget of $500, your ad will run for 1,000 click-throughs.
4. Align your landing page with your advertising
Your goal is to turn website visitors into customers, so make sure your site is aligned with your advertising pitch. Your site has to make the same offer as your advertising and be clear, compelling and differentiated from your competitors.
5. Target your audience
You can target your ads to potential customers in specific geographic locations. If you own a restaurant, for example, you might choose to advertise locally to create awareness of your location. If you sell a product online, you will want to select countries you're equipped to ship to.
Is it working?
6. Analyze your results
Major search engines provide tools and reports that tell you how well your ads are working and how you might improve your campaign. Monitor how many clicks you have earned as well as data about your visitors, including their geographic location. Above all, keep a close eye on your conversion rate. A conversion is a click-through that results in an action such as a sale or a request for information.
Tracking your conversion rate allows you to determine your return on investment.
7. Learn and adjust
As you track your results, try using different keyword combinations, tweaking your advertising copy or targeting different locations, to see what works best.
Get extra value
8. Search engine optimization
Use the information learned from testing and tracking your success with keywords to help boost your site's "organic" ranking in search results by using search engine optimization strategies.