Keyword advertising refers to any advertising that is linked to specific words or phrases. Common forms of keyword advertising are known by many other terms including pay per click

Pay per click

Pay per click is an Internet advertising model used to direct traffic to websites, where advertisers pay the publisher when the ad is clicked. With search engines, advertisers typically bid on keyword phrases relevant to their target market...

 (PPC) and cost per action

Cost Per Action

Cost Per Action or CPA is an online advertising pricing model, where the advertiser pays for each specified action linked to the advertisement....

 (CPA). There are multiple variations each starting with "pay per" or "cost per" such as pay per action (PPA), pay per cost (PPC), cost per mille (CPM).

It is believed that Yahoo! pioneered the keyword advertising buy. In 1996, Chip Royce, head of online marketing for InterZine Productions of Boca Raton, Florida, approached Yahoo!'s sales agent (Flycast Communications) seeking more effective, targeted advertising within Yahoo!'s search results. Yahoo! obliged placing targeted ad banners when the keyword "Golf" was searched by Yahoo! users. Yahoo! later turned this opportunity into a formal marketing program for its entire customer base and promoted this in a July 1996 article in the now defunct 'Internet World' magazine.

Google AdWords is the most well-known form of keyword advertising. Google displays search ads specifically targeted to the word(s) typed into a search box. These keyword targeted ads also appear on content sites based on Google's system's interpretation of the subject matter on each page of the site. This is known as contextual advertising

Contextual advertising

Contextual advertising is a form of targeted advertising for advertisements appearing on websites or other media, such as content displayed in mobile browsers...

.

Other search engines offering keyword advertising include Yahoo! Search Marketing

Yahoo! Search Marketing

Yahoo! Search Marketing is a keyword-based "Pay per click" or "Sponsored search" Internet advertising service provided by Yahoo!.Yahoo began offering this service after acquiring Overture Services, Inc....

, Microsoft AdCenter

Microsoft adCenter

Microsoft adCenter , is the division of the Microsoft Network responsible for MSN's advertising services. Microsoft adCenter provides pay per click advertisements. This is a service aimed at people who want to advertise a product...

, Looksmart

LookSmart

LookSmart is an online advertising company based in San Francisco. LookSmart provides search advertising products and services to text advertisers, as well as targeted pay-per-click search and contextual advertising via its Search Advertising Network...

, Miva (FindWhat and e-Spotting are now part of Miva), and many others.

A less common type of keyword advertising hyper-links individual words within the text of a page to small pop-ups displayed by mouseover

Mouseover

In computing a mouseover, mouse hover or hover box refers to a GUI event that is raised when the user moves or "hovers" the cursor over a particular area of the GUI. The technique is particularly common in web browsers where the URL of a hyperlink can be viewed in the status bar...

. Advertising of this type is offered by Kontera

Kontera

Kontera Technologies, Inc. is an advertising network, providing in-text advertising and information services.Kontera's technology is based on several proprietary semantic, statistical, linguistic, and yield-maximization algorithms that analyze online content, extract and rank topics and keywords,...

, Vibrant Media, and LinkWorth. Kontera's version is named ContentLink, Vibrant Media's version is called IntelliTXT

IntelliTXT

IntelliTXT is an "in-text" advertisement platform developed by Vibrant Media, and is an example of keyword advertising. Website authors insert a script into their pages which calls the IntelliTXT platform when a viewer views the page; this script then finds keywords on the page and double...

 and LinkWorth's version is called LinkWords. They refer to their product as in-text placement. Advertisers choosing to test this type will want to exercise moderation to increase Internet user acceptance.

Pixel advertising

Pixel advertising

Pixel advertising is a form of display advertising on the web, in which the cost of each advertisement is calculated dependent on the number of pixels it occupies....

, popularized by The Million Dollar Homepage

The Million Dollar Homepage

The Million Dollar Homepage is a website conceived in 2005 by Alex Tew, a student from Wiltshire, England, to raise money for his university education. The home page consists of a million pixels arranged in a pixel grid; the image-based links on it were sold for $1 per pixel in blocks...

 is another type of keyword advertising. In pixel advertising, graphic advertising space is sold on a site. Often advertisers are charged per pixel, with a minimum of 10 by 10 pixel blocks. With keyword advertising, advertisers buy a text link on an advertising site. When the advertising space is sold out, a "word cloud" is formed, with an apparently random group of words, each linking to another internet site. Two of the first keyword advertising sites were 500words.com and awordsworth1000pictures.com, which were launched in mid-2006.

Keyword advertising is based on a principle of search engine optimization

Search engine optimization

Search engine optimization is the process of improving the visibility of a website or a web page in search engines via the "natural" or un-paid search results...

, which states that the anchor text

Anchor text

The anchor text, link label or link text is the visible, clickable text in a hyperlink. The words contained in the anchor text can determine the ranking that the page will receive by search engines. Since 1998, some web browsers have added the ability to show a tooltip for a hyperlink before it is...

 of incoming hyperlinks to a site will cause search engines to associate the site with that term and improve the site's search engine ranking for that keyword.

Trademark Issues in Keyword Advertising

There have been a number of trademark infringement cases brought by brand owners and companies concerned with how other keyword advertisers used their trademarks or brands in pay-per click or keyword advertising. Courts in the U.S. and around the world have been slow to issue clear guidance on the issue of whether use of trademarks as keywords constitutes trademark infringement. This lack of guidance, however, may be partially due to the fact that the majority of keyword advertising cases are settled out of court and do not proceed to trial. This leaves courts unable to make legal decisions on issues brought in these cases. As a result, there are still many unanswered questions on the issue of whether the sale or purchase and use of a trademark as a keyword to trigger Internet advertisements is trademark infringement.