By VICTOR KATHEYAS

EVEN as a young child, Leonard Tan's entrepreneurial streak was clearly evident.

While other children were content playing with country erasers (players take turns to flick erasers usually printed with a country's flag), Mr Tan took it a step further.

Instead of just winning opponents' erasers and keeping them, Mr Tan shrewdly sold them at 10 cents apiece.

'In my mind, it was very simple - it was just trading. You get something at x price, and you arbitrage it,' he explained.

Many years later, he is putting this business acumen to work as managing director of PurpleClick, a company which offers search engine marketing and optimisation services to businesses, most of which are SMEs as well. Mr Tan is proud that PurpleClick is the first of its kind in the region to be authorised by both Yahoo and Google.

The company has grown from a two-person team three years ago to one with about 20 staff, with turnover of about $2.6 million for the financial year ended last December.

The company's primary area of focus - search engine marketing and optimisation - involves bringing 'people who are searching for certain products and services to their potential vendors', Mr Tan said.

Elaborating on this, he said that a travel agency or airline could work with PurpleClick to reach out to customers who were interested specifically in the services that they provided. When a potential customer who was interested in taking a holiday keyed in certain key words in an online search engine - such as 'holiday' or 'airline tickets', for example - the results of the search could also display links to potential vendors who had advertised through this medium, such as travel agencies and airlines.

'We link the businesses (to potential customers who use search engines) by using the keywords that are most relevant to the user's experience

'In a nutshell, we generate leads to our customers,' he said.

PurpleClick's value proposition is buttressed by the fact that it offers optimisation services as well: besides serving as a one-stop shop enabling vendors to leverage on advertising opportunities presented by search engines, it also analyses results and helps them advertise in a manner which is targeted, cost-effective and advantageous.

'Assuming you click on the ad and subsequently buy a ticket for $10, if Customer A pays 50 cents when you click on the ad, the gross profit is about $9.50.

'But for another keyword, in another search engine, this click could cost $2. But maybe Customer A sells a ticket that is worth only $5. The gross profit is thus $3.

'So our role is to help them find out which keyword works best in whichever search engine to maximise their yield,' he said.

Demand for such services is quite strong in the US, and Mr Tan estimates that the market will be worth about US$25 billion by 2010.

However, he estimates that the market for online marketing in South-east Asia, on the other hand, is worth about US$200 million. Given that 'search engine marketing is a subset of online marketing', he feels that it has much potential to grow in the region - and he wants to ride on that trend.

Part of PurpleClick's strategy is to reach out to local businesses, and convince them that advertising through search engines is a viable and beneficial option. To this end, it has conducted seminars with the Singapore Business Federation (SBF), International Enterprise (IE) Singapore, as well as the local chambers of commerce.

Mr Tan is also quick to reassure potential customers that this type of marketing is highly performance-based, because companies pay when Internet users, who are actively seeking the kinds of goods and services that advertisers provide through a search engine, click on advertisements by the company.

This is especially relevant in a downturn, when cash management is very important, Mr Tan said, because it allows firms to understand, and subsequently maximise, their return on marketing efforts.

Equally important, consumers are more price-sensitive and are likely to do more research online before committing to a purchase - which means they just might be more likely to click on a company's ad.

This article was first published in The Business Times.