A lot of small business owners know that they need to be on the web and that they can’t just sit back and wait for customer to come to their site, but they don’t know much about the strategies involved in internet marketing.

I thought I’d take a moment to summarize some of the industry vernacular.

Search Engine
Almost everyone knows what a search engine is these days. Certainly anyone who is looking for your services knows what a search engine is, even if they’ve never heard the term “search engine” in their life. The best examples are Google, Yahoo, and MSN’s Bing. These are websites where you can enter some words for what you’re looking for and find relevant web pages - hopefully yours.

Search Engine Marketing (SEM)
Search engine marketing is the catch-all phrase and simply refers to any efforts to market your company to people using search engines. It includes both SEO and PPC.

Key Words
Key words are simply the words that people type into the search field of a search engine to find the product or service or information that they are looking for. A key word might consist of a single word or can be a phrase. For example someone looking for diamond rings might simply type in “diamond rings” or they might type in “best prices on diamond rings in queens new york.” Key words are the seeds of your online business. They are where all the strategy begins.

Search Engine Optimization (SEO)
The process of optimizing the pages and content of your web site so that it can be found easily in search engines is called “search engine optimization” or SEO. The process also involves creating links to and from other web sites with relevant content. These listings are also referred to as “organic searh results” which implies that the listings arise from the natural process of the search engine’s scoring system as opposed to the synthetic process of paying for your listings to appear.

Search Engine Ranking Position (SERP)
This refers to your organic search engine listings. If you are the first (non-paid) listing on the first page of Google for a particular keyword your SERP is 1 for that keyword. As your SERP number rises (meaning you’ve moved down the page) searchers are less and less likely to find and select your listing. In fact if you’re not in the top five listings you’ll get a very small share of the available market - or none at all.

Pay-Per-Click Advertising (PPC)
Also commonly referred to as Cost-Per-Click (CPC) or Paid Search Advertising, these are the “sponsored links” - text and sometimes graphic ads that appear on many search results pages. These are most commonly purchased through an automated bidding process. It requires setting up an account with the search engine and creating campaigns with ads that link to your website. Unlike most other forms of advertising, once the account is set up ads can be turned on and off according to your production capacity or automatically according to a schedule, to suite your needs and budget.

Clickthrough Ratio (CTR)
CTR is only one measure of how much action your ads are getting. A click through ratio of 2% means that on average for every 100 times your ad is displayed among the search results 2 people have clicked on it bringing them to your web page. Many factors effect CTR, but the two most important are how high up on the results page your ad appears and how well the ad copy relates to the searchers intentions. Higher CTR doesn’t necessarily mean more customers nor higher return on investment. It could mean your keywords or ads are too general or your bids are too high.

Conversion Rate
Once a prospect finds your web site they have the choice of taking action or not taking action. When your visitor follows through on your offer or call to action it’s considered a conversion. The conversion rate is the ratio of conversions to the total number of visitors. A conversion rate of 10% means that on average, for every 100 visitors to your page, 10 of them took the desired action. The higher the conversion rate the greater the return on your investment.

Bounce Rate
This is oddest sounding but actually the second most important term you’ll need to know. Bounce Rate is the percentage of people who land on your page who decide it’s not what they are looking for, and immediately “bounce back out”. If 75 out of 100 people who visit your web page leave a few seconds later, your bounce rate is 75%. A high bounce rate means there is either something wrong with your keywords or ad campaigns, or something wrong with your web page.

Social Networking, Social Media, Social Bookmarking
This refers to the efforts to reach prospects by utilzing the capabilities of social networking sites such as Facebook, MySpace, Twitter, etc., or via social media sites such as YouTube or Blogger or iTunes, or social bookmarking sites such as Digg and Reddit. These sites present opportunities to get your message out to people who might be interested in your service or product. More details in a future article. Business networking sites such as LinkedIn also fit in this category.

Online Reputation Management
The process of measuring customer satisfaction, soliciting customer testimonials, and dealing with bad reviews or bad publicity is called “reputation management.” A good reputation is becoming more and more critical as the social web develops and more and more people start communicating their impression of your company via review sites such as Yelp and Kudzu and social networks.