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Online sales jumped 51% in 2003 with 79% of all online retailers being profitable according to Shop.org and Forrester. Total sales for 2004 is expected to be 6.6% of all retail sales. To stay on top, online retailers need more than new visitors. They must have qualified, paying customers.

Search engine marketing has proven to be a very successful means of delivering customers to web sites. However, not everyone is familiar with the intricacies of this type of advertising.

If you are using search engine pay-per-click marketing to promote your online business, here are the top 13 mistakes you should avoid.

1. Lack of a search engine marketing strategy

It would seem obvious that having a plan before you start spending money is important. Yet I see companies spending money on keywords where they already have a high, natural ranking. Determine what products and keywords will produce the best results. Set a budget for each item. Without it, money will bleed in the direction of least resistance. Suddenly, you may find that your money has gone for a product or keyword that has not been profitable at the expense of better keywords and products.

2. Lack of keyword research

Think like a searcher. What keywords will lead prospects to find your products? What is the competition? Will the bidding be so high that profits are unlikely? Is there another less popular keyword that will pre-qualify visitors and increase ROI (return on investment)?

3. No established performance expectations

If you have not established minimum performance expectations, how will you know whether to pull the plug on a keyword campaign? Understand in advance what is required to return a profit on your chosen keywords. If your conversions (turning visitors into customers) does not meet your expectation, you will know when to shut down the campaign.

4. Lack of testing

There are many factors that can be tested to improve performance. Have you tested for the best ad copy? What brings the best CTR (click through ratio)? What factors on the landing page bring the highest conversions? Page headline? Customer benefits? Call to action? Don't leave anything to chance. Test all factors to gain the best results.

5. Lack of tracking statistics

You will not be able to determine your ROI if you do not track the number of impressions and clicks you receive. What is your conversion rate? This gives you the value for each click you receive. What are those clicks worth in profit received versus what you paid for the clicks? Ignore these statistics and you cannot determine if your campaign is paying for itself and dragging you into a hole.

6. Visitors not pre-qualified

Your goal isn't to get the largest number of visitors possible. It is to bring customers to your site. Pre-qualify visitors by eliminating the Looky-Lou's. Put a price in your ad. Mention a specific product. Make sure that when someone clicks on your ad, they are interested in buying.

7. Going for #1 position

The number one position is highly competitive fetching the highest prices per click. But many searchers will click on that position to check the accuracy of their search results. Even if what they find is what they want, they will still want to check with several other sites before making a purchase. Why pay premium prices for searchers whose clicks are just testing the waters? Number three might produce fewer clicks but produce more qualified visitors.

8. Set a maximum bid

It's a good idea to set a maximum bid. However, don't apply that max to all bids. Certain products may have a higher profit margin and can afford a higher maximum. Base your maximum on your ROI for each item.

9. Not using proper match types

There are different ways of matching keywords for your bids. A broad match (Google's default) will match your keywords used in any order on the search. Your bid for "used car" will also match "car used in James Bond movie." You'll get a lot more impressions but the clicks may be worthless with this match.

Overture's default is to match words (singular or plural) in the same word order as your keyword bid. Google allows negative keywords where your ad will not match if a specified keyword is used. Overture will allow keywords to target regional markets. Be sure to pick the match types that best suit your campaign.

10. Expecting search engine traffic to become customers

The search engines can send you traffic but it is your job to close the sale. Those conversions depend upon the quality of the landing page, page content, presentation of customer benefits, your call to action, the attractiveness of your web pages, and your price compared to the competition (including shipping costs). The better you do your job, the more customers you will find in that search engine traffic.

11. Forgetting smaller PPC sites

Although Google and Overture are the largest pay-per-click sites, there are many smaller ones with lower prices. Don't forget to check Ask Jeeves, LookSmart, FindWhat, Kanoodle and others.

12. Making SEO more important than what visitors see

Sometimes we get so involved in making a site rank well through search engine optimization that we forget the site must also look good to our visitors. Don't force keywords where they don't belong and other techniques that create clunky pages. Fail to give the users a good experience and they will use the Back button instead of using your site. Don't lose sales because of an unattractive site.

13. Forgetting top ranked sites are your competition

It doesn't matter how important you think you are. Top ranking sites push you aside when it comes to traffic. Ignore them at your peril. Receiving and maintaining top rankings is constant work. Forget your competition and they will capture your customers. Constantly strive for improvement. Find your competition's strengths and weaknesses and use that information to help you compete.