AdSense is an application of AdWords beyond Google.com

AdSense is an application of AdWords beyond Google.com



Making “sense” of AdSense means understanding that it is really an offshoot of
the older Google model, AdWords. But they are not the same thing.



Google AdWords


If you have ever searched on Google, you have seen AdWords.


Google AdWords are the small text ads that are displayed on the side of the
search results in Google. These ads are contextual of course – in this case the
context is the search terms you entered. The ads will be served based on what
you’re looking for. So, if you do a search on “printing services” you will get ads for
printing services along with your search results!


How does this generate money for Google and the advertisers?


Google AdWords works on a model known as pay-per-click. When someone
clicks on an AdWords ad, the advertiser of that ad has to pay Google a certain
amount. It’s easy to track and fully automated.


We say “certain amount” because that amount is different all the time and is
subject to market forces – in this case, bidding. Something has to determine the
placement of those ads, and what determines it is how much the advertiser offers
to pay per click. When you submit this kind of ad to Google, you submit it with a
bid – which is compared to other bids for similar keywords. It’s an auction style
process.



The position of the AdWords ads is based on the bidding amount of keywords of
an ad. Obviously, the higher the bid, the higher the position the bid buys you. For
instance, if the highest bid for the keywords “Internet marketing” is 80 cents per
click, you can get top position by bidding 90 cents. Then every time someone
clicks on your ad, Google would charge you 90 cents, and you would retain the
top position until someone else bids more for the same search word placement.



Google AdSense, as stated earlier, is an extension of Google AdWords. It takes
the AdWords concept and moves it off of Google’s search page and onto
thousands of other web pages. The ads that are displayed on the websites are
Google AdWords ads.


It’s good for the advertiser, who gets more and broader displays, for Google, who
charge more for this program, for you, who will make money from the
clickthroughs on your pages, and also for the consumer, who will see cool ads for
stuff they are probably interested in!


So how exactly are you making money from all this? You earn a share of the
pay-per-click amount, every time a visitor clicks on the ad. So you just need to
get ads on your site…

Source:AdSense Revenue Exposed Michael Rasmussen and Jason