On a typical day, 70 million American adults use the Internet. Seven out of 10 U.S. households now search online for local merchants and services -- as many as those who check newspapers for this information, reports the Kelsey Group and Constat, Inc. Consumers increasingly shop online, too, even if they plan to buy offline. How can you attract their attention?

Pay-per-click advertising has been around, but a new form is emerging in a manner that lets advertisers precisely target their ads at the local level; pay fees based on those ads' performance; and effectively reach consumers looking for the services they offer. On local search engines, pay-per-click works like this: Shoppers enter a category name, such as "florist," and type the name of a town. Within seconds, PPC listings appear that link them to detailed information about the advertisers. And advertisers pay only when shoppers "click" on their information.

Providers of local search such as Yahoo, SuperPages.com and Google "are an increasingly important channel for advertisers, both national and local, to reach local consumers," says Greg Sterling, Kelsey Group senior vice president.

Amy Knight, owner of Knight's Moving and Hauling in New Port Richey, Fla., used one local search site, Verizon SuperPages.com, for a campaign. After just a few months, she saw the number of calls she receives from potential customers increase by 20 percent, all the while also reaching a national audience.

You call the shots

Although PPC is fairly new, 11 percent of small-to-medium-size U.S. businesses are already trying it, and more than half plan to increase their PPC advertising next year, according to the Kelsey Group. Another 34 percent are interested in this online ad strategy and of this group, 75 percent want to use PPC within the next year, according to the Kelsey Group survey. What's the big attraction?

"For small businesses, selecting categories and the geographic area they want to target is very straightforward. So is deciding how much to pay for each click," reports Eric Chandler, Verizon SuperPages.com vice president, e-commerce marketing. "Another advantage is the tool's flexibility. You can choose full-service assistance or manage your program independently online at no charge. You can pay for higher placement at busier times of the year, making changes literally overnight in your price per click, copy and target audience. And since you pay for performance, you can base your budget decisions upon the return on your investment."

Here's how to get the most out of a PPC strategy:

  • Select the categories that best describe your business.
  • Select the geographic area you want to target - city, metro, state or nationwide.
  • Calculate the value of a single new customer and determine what you are willing to pay for a qualified lead. This can range from 20 cents to a few dollars per click. The more you bid, the higher your ad will appear in the results. To help small businesses compete with big budget national chains, some search engines reserve space at the top of search results for local PPC advertisers.
  • Set a budget and a monthly maximum spend. If your clicks bring in business, increase your budget and raise your maximum spend.
  • Choose self-service or full-service management. If you're too busy or lack the know-how to manage your own account, look for a search engine that can help set up your ad, provide advice on categories and bid amounts and offer ongoing account maintenance.

Give customers the facts

Whether you already have a Web site or you don't, pay-per-click provides potential customers with information about your business. Some search engines provide PPC advertisers with a business profile at no extra charge. The business profile includes contact information, hours of operation, payment options, maps and directions, links to e-mail addresses and Web sites if they exist.

If you do have a Web site, pay per click offers you a way to let people know it exists. "PPC is one of the fastest ways to drive large, predictable amounts of extremely targeted visitors to your Web site," says Jean Lam in WebProNews. "There is a huge difference between getting normal top five rankings in the major search engines and getting a top five ranking in the pay-per-click listings."

Choose wisely

If you decide to investigate pay-per-click programs, be sure to find one that will give you the best return on investment and meet your objectives. Here are some good questions to ask:

  • Does the site attract the people who are looking for my products and services? How many people visit, and how is the site promoted?
  • Does the site provide focused, relevant search results and offer targeted geographics?
  • What determines the placement of my ad? Do searchers check dozens of listings before getting to mine, or is there a section reserved for local advertisers?
  • What are the options for making my ad easy to find? Are there predefined keyword categories that make sense for me and for the searcher?
  • What are the fees, and how am I charged? Do I pay every time one visitor clicks on any of my links, or only once per visitor? Can I change my information quickly and easily?
  • What type of support is provided? Is a full-service option available if I want it? Is there an option to design and set up a Web site?
  • Are both pay-for-performance and fixed-fee options available?

Online shopping is skyrocketing, so there's no time like the present to improve your Internet presence. "Consumers' growing familiarity and confidence with online shopping, coupled with a dramatic increase in broadband penetration and continuing efforts by retailers to simplify the shopping process across channels will translate to substantial gains for merchants," says Dan Hess, senior vice president at comScore Networks. "Aside from the growth in direct online spending, we'll also continue to see the substantial impact on offline retails sales of consumers' use of the Internet to research products and compare prices."