Search can be an etailer's best friend -- but only if you're smart about it.

Online retail sales have jumped 51 percent this year, and 79 percent of all online retailers are profitable, according to a recent survey by Shop.org and Forrester. It also says that online sales will account for 6.6 percent of total retail sales in 2004, up from 5.4 percent in 2003.

So Internet retailing is no longer a fad -- it's a fact. To profit from this increase, etailers must learn how to pull in not just new visitors but qualified, paying customers. Search engine marketing has proven to be an extremely effective means of achieving online sales growth, but not all etailers know how to properly execute their search engine marketing campaigns.

Here are the most common mistakes to avoid.

1. Not having a search marketing strategy

This may seem obvious, but all too often companies barely have a specific budget line item for search engine marketing (SEM), let alone a strategy. Is the strategy to target certain terms for high natural search engine rankings and to buy visibility for the others with pay-per-click listings? Or is it to identify high-cost pay-per-click (PPC) terms and target those for search engine optimization (SEO)? What means of measuring ad-cost-to-sales will be implemented, and is this tool an end-to-end solution? And is there a realistic timeline associated with achieving these goals? Before spending time or money, put together a solid plan.

2. Not doing a thorough job of keyword research (and forgetting to think like a searcher)

For each keyword that you identify for search engine marketing initiatives, there are probably two or three others that can deliver better, more targeted traffic. Misspellings, odd spacing, and product feature- specific variations should also be considered. And while some experts espouse a more-is-better approach to keywords, this is not always the case, especially when you're paying for all that traffic. Thorough keyword research can save money and future disappointments.

3. Not establishing performance expectations ahead of time

Sure, everyone talks about return on investment (ROI), but the reality is that there are many metrics that go into a successful ROI and not everyone has done the "back math" to know what is even realistic. And if you launch search engine marketing campaigns without establishing benchmarks -- e.g., do you really know what your max CPC could be? -- and performance expectations, how will you know if you can continue your search engine marketing efforts as is?

4. Not conducting enough testing

Setting up keyword campaigns without a testing plan is likely to result in unnecessary ad spending and poorer sales conversions than could be attained. You should be testing multiple factors: search terms, ad copy, match type, landing page content, offers, calls-to-action, etc., and there are a variety of tools that allow you to do testing: ad groups or categories in search engines, unique landing pages and page optimizer tools.

5. Not tracking

The blessing and curse of the Internet is how much measurable data can be tracked and collected. For search marketing, treat this as a blessing and use tracking to optimize your efforts and get the most ROI out of the money you spend. Most Web site traffic analytic tools still can't put a price on the head of your average user, so you'll need more sophisticated methods. Shopping cart, affiliate management and conversion software are some solutions, as are third party ad servers. Choose the solution that gives you the most usable data for your needs.

6. Not reducing the prequalification cycle

The less qualified your search engine traffic, the less likely you'll be to make sales from that traffic. Instead of trying to optimize your site for broad terms that attract a lot of visitors but not targeted buyers, focus on terms and demographics that lead to sales. Apply the same strategy when buying PPC keyword listings, and use your ad copy to help weed out unqualified buyers. Don't just rely on general search engines for qualified traffic either. Go where your buying audience shop -- on shopping comparison search engines like Shopping.com, MSN Shopping or Yahoo! Shopping, and in vertical portals like travel sites.

7. The No. 1 spot isn't always the best

Not only does the No. 1 paid listing cost more, it sometimes isn't always the best one visibility-wise. For example, in Google, the top two paid listings may be bumped up above the natural listings and this location might be overlooked by the searcher suffering from "banner blindness." Conversely, Yahoo! lays out its paid listings from Overture quite differently -- the No. 5 paid listing is actually at the top of the small right-hand boxes. Test to see what placement yields you the best results.

8. Establishing a universal max bid

Yes, it's good to have a maximum bid based on established metrics, but don't unilaterally apply that bid to all terms if certain terms are for products that yield more net profit. Terms with greater profits can afford higher max bids, so adjust your campaign accordingly.

9. Not setting up proper match types

It's easy to overlook setting up and finalizing the best match type for your PPC keywords -- match types can be confusing, tedious and seemingly unimportant. But they're not, and they can make the difference between a huge ad spend and a modest one, and ROI figures that meet your benchmarks vs. ones that don't.

10. Failing to recognize the importance of day parting

For some advertisers, it's wiser to run campaigns only at times of day or days of the week when their customers are more likely to be shopping. Doing so can help save money, improve conversions and cost less in customer acquisition. Day part controls can be implemented using software tools so that it's not a manual process.

11. Expecting the search engine to close your sale

Sure, the search engine can send you traffic, but that doesn't mean that where you send them is going to close the sale. There are so many other factors that must come into play once you get the visitor to your site: the messaging on the landing page, the offer, the calls-to-action, the quality of the graphics, product pricing (especially when compared to other sites selling similar products), shipping and handling costs, etc. If you do your job, too, search engine traffic will be much more likely to make you money.

12. Forgetting second-tier PPC engines

You don't have to rely on only Google and Overture. There are multiple second-tier PPC search engines that may also generate sales at affordable -- often times lower -- PPC costs. Don't overlook FindWhat, Kanoodle, A-Ha, Ask Jeeves, LookSmart and others.

13. Giving SEO precedence over the user experience

All too often, companies become so obsessed with garnering top natural search engine rankings that they end up converting their Web sites into something garish-looking, with non-functional navigation and no clear marketing message. The end result is that they may have great rankings but lousy sales -- don't make this mistake.

14. Not considering top-ranked Web sites as your competition

The fact is that top-ranked sites, be they in natural results or paid results, get more traffic than unranked sites. Just because you're a big brand company doesn't mean that at the moment of search, your potential customer knows that you sell what they're looking for or even that they'll remember you. They're going to go where the search engines direct them to, and therefore, those Web sites are your competitors. Treat these competitors as you would your other competitors and get to know their strengths and weaknesses.

Hollis Thomases is President, Web Advantage, Inc.