Marketers hone the focus of online search ads

— -- Jessica Jensen makes money when people visit her Low Impact Living website, a directory devoted to helping you "green" your home.

In a tough economy, sales are down and customers are taking longer to pay bills. But she has not cut back spending on search advertising — those little text ads that appear near search results. "As with every other business, we need customers," she says. "I can't stop advertising, so instead I'm spending every dollar and dime efficiently."

Google dominates the "pay-per-click" business, though Yahoo and Microsoft offer similar programs. The company had a 61.2% share of searches in October, compared with 16.9% for Yahoo and 11.4% for Microsoft, according to market tracker Nielsen Online.

Google won't say whether businesses have pulled back spending during the downturn. But it does say customers are taking a different approach to how they market. "They are refocusing their campaigns," says David Fischer, Google's vice president of global online sales. "We're finding that consumers are most interested in costs and pricing. So what's working right now are discounts and low-cost offerings."

Rolling with the times

During last year's holidays, entrepreneur Jensen marketed products such as energy-efficient LED lighting fixtures at about $50 a pop. This year she's all about products that help cut utility bills. "I've shifted my focus accordingly," she says.

Search ads are more important to Jensen's business than ever, she says, because they're more affordable than other forms of advertising, and measurable.

Google and other search engines don't set the price for the ads. Instead, they are sold auction-style, where high-demand "keywords" (terms we all use in Internet queries) sell for more.

"In the beginning, everybody wanted to be on Google and would happily spend $15 or $20 per click, anything to build traffic. But not anymore," says Avi Wilensky, president of Promediacorp, a company that helps businesses with their search marketing campaigns.