Google Adsense is small contextual ads that are published on web sites with the consent of the site's owner. The ads are created by publishers that are selling products and/or creating brand awareness. The ads which have been created belong to another program sponsored by Google, called Adwords.
Google Adwords and Adsense are very closely linked. Every time someone does a search on Google or one of their partner networks and clicks on one of the sponsored ads, then the person who created that ad will pay Google a predetermined price. This is how the phrase "pay per click" originates.
When Google receives money from the creator or publisher of the ad, they have to split the amount with the person who owns or hosts the site that the Adwords ads appear and that is the beauty of Adsense. Nobody really knows what exactly the split is as it is a well guarded secret, but it does vary and let's assume it is 50% for our purposes.
For example if the Adwords ad generates .40 per click, then the Adsense program pays the site host .20 when the ad is clicked on their site. Google keeps the remaining .20. Google and the site owners can therefore be considered partners.
The Adsense program displays itself in a highly relevant way. What does this mean? The easiest way to see this is by looking at an example. Let's say Mary had a site featuring women's clothing. If Mary's site incorporated the Google Adsense program, then the ads would be targeted towards women's clothing. An Adsense ad appearing on a particular page dedicated to shoes would also focus on shoes.
So how is the price per click worked out? The Adwords program takes care of this. Adwords publishers work out the value of keywords and place bids on them. If a keyword is particularly sought after, then the publisher will pay more per click. Highly sought after keywords can be worth over $50 per click, while low value ones are only worth a few cents.
By putting Google Adsense on their site, it wouldn't be a wonder to see them making some nice money if the site they own generates some decent traffic. With the sole purpose of attracting high paying Adsense ads, many Internet marketers create web sites with specific content. -
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