Pay per click represents a new age of targeted advertising. Instead of broadcasting a message or promotion to an enormous mass of consumers, users are pre-selected to receive ads by the keywords they enter into a search engine.

Google and Yahoo offer 2 types of advertising programs across their networks. You're surely familiar with the first option which simply lists sponsored links to the right of the search engine results (commonly known as the Search Engine Results Page, or SERP). Advertisers pay for this exposure on a per click basis, only paying for users who click on their link. Since this model is easy to track and is entirely results based, it represents a huge improvement over other Internet advertising offerings such as banner ads and directory listings.

There’s also a second vehicle for paid advertising that isn’t as well known: advertisers can show pay per click ads on Google and Yahoo’s content networks. Content, or contextual advertising places ads on space that companies essentially lease across the Internet. It works like this: Google and Yahoo pay a fee to site owners for each click generated; in turn they charge advertisers based on the same bidding system used on the search engine page. Ads are served to relevant sites that match up with the advertiser’s keyword list. Since the site owners have little to lose (they take in money with no risk, the only drawback being that they have a minor commercial presence on their pages) the program has a wide reach. Google estimates that their search engine and content network combined reaches 80% of the Internet. You’re probably used to seeing these ads displayed on the margins of your favorite news, entertainment, and sports websites.

So what’s the benefit of the content network for advertisers? Well, until recently, savvy advertisers were somewhat wary of the program’s payoff. While the network had an exceptionally broad reach, advertisers had little choice about where the ads appeared. This was especially problematic for large, recognizable companies that were image conscious about brand and also obviously did not want ads displayed on competitor’s sites. Additionally, advertisers were forced to submit the same keyword bid they maintained for placement on the search engine page. This lead to high cost per click (CPC) rates while the wide scope of the program tended to diminish conversion rates. Together, those two factors obviously brought about cost per conversion rates that were a little high for most people’s tastes.

But Google has made significant changes in the content advertising program that make it much more attractive. First, they’ve allowed advertisers to submit a list of “do not display” websites to prevent ads from appearing in undesirable places. Second, they established a separate bidding systems that allows advertisers to set different bids for content ads. These two changes have given advertisers more control over placement and cost, and many who were hesitant to advertise on the content network are now getting their feet wet.

Check it out for yourself, Google has reams of information on implementing a content advertising campaign.