Twelve years after companies first started advertising on the World Wide Web, online advertising has become a key consideration not just for the Dells and Nikes and General Motors of the world but for every company that sells goods or services online. For entrepreneurs, it is often one of the most essential tools for landing new business -- because it's cheaper, easier to launch, and often more effective than other forms of advertising.

In 2005, U.S. firms spent $12.5 billion in online ads, according to a 2006 report by DoubleClick, the Internet advertising firm. Smaller firms represented 75 percent of that spending -- a clear sign of the medium's effectiveness. And with more than 200 million Internet users in the U.S., it's no wonder that the online advertising market is growing at 30 percent annually, DoubleClick found.

But there are right ways and wrong ways to advertise online. For example, a business owner must learn how certain companies always rank high on search engines. And there are mistakes you can make with certain types of ads that will alienate the very customers you seek to attract.

Here are a few online advertising strategies and techniques that work:

* Learn how search engines work. Search engines such as Google, which indexes over 10 billion Web pages, sell placement on their search results page, usually above or to the right of the organic list. Companies pay a fixed amount whenever a user clicks on their ad, which is linked to specific search terms or individual keywords. The more popular the term, the more expensive the fee, so be specific -- instead of the generic "books" select genres such as "thrillers." Overture's keyword selector tool lets you determine how common -- and thus expensive -- specific terms are.

* Use search geographically. "If you were a dentist in Berkeley, Calif., you could ensure your ad only shows up when people from Berkeley, or the Bay Area, search for a dentist," says Rebecca Lieb, the executive editor of the ClickZ Network, an Internet marketing firm. "The search engines make this determination by the Internet Protocol address of the searcher, and the advertiser selects the geographic parameters of the ad."

* Make a landing page. When a customer clicks on your ad, link it to a "landing" page that's relevant to the ad they've just seen. If you're advertising a best-selling novel at half-price, the ad shouldn't jump to your bookstore homepage, where customers will have to work to search for the offer, but to a page featuring the particular novel.

* Target your ads. Consider a site's demographics when placing an ad. Logically, an offer for a gardening book would do better on a website catering to retirees than to teenage boys. Finds sites that dovetail with your marketing message as closely as possible. Lieb suggests also considering the use of "contextual ads," also offered by search engines. Ads related to gardening would only appear, for example, on pages of blogs or news sites when they publish content or an article related to gardening. You can also block matches when running these ads, e.g. "apple" and "fruit," but not "computer." So your apple ad would appear on food or recipe pages, but not sites about iPods.

* Employ rich media. These ads are just as eye-catching as pop-up ads, which boast higher click-through rates than text or banner ads. Also called floater, popover, overlay, or hover ads, they use animation to play graphics or video over an existing page rather than opening a new window. And unlike pop-ups, they can't be stopped by blocking software. Rates for rich media ads are higher than for traditional banner ads, but study after study shows they get more attention and higher response rates, Lieb advises.

* Stay fresh. If you're planning a long-term campaign, change the format periodically. Once consumers have seen the same ad several times, they're more likely to blank it out. By rotating ads, you can track the effectiveness of different formats. Use cookies -- files that track visitors to your site -- so they aren't exposed to ads they've already seen.

* Focus your message. Skip cleverness in favor of directness. You only have a few seconds to tell a consumer what you have to offer before their attention wanes. Be concise. Always include your website address. Even if they don't click on your ad, you'll build up brand recognition.

* Don't irritate. Studies have shown that overly-intrusive ads -- such as ads that launch audio, float around or don't have clearly-marked "close" buttons -- turn off consumers. You may end up alienating the very customers you want to attract.