A Guide to Understanding Google AdSense and Google AdWords

Google AdSense and Google AdWords are two programs that are gaining popularity as people use these tools for their Web sites, blogs, and businesses. Google AdSense allows Web site owners to monetize their sites, thus making additional income by offering Web site "real estate" in exchange for a percentage of the advertising sale revenue. Google AdWords allows merchants to advertise their businesses online, paying Google a monthly fee in exchange for this service.

The way it works is rather simple. When you generate a code for Google AdSense and insert it into your Web content, Google uses something called contextual advertising to analyze your site's content. Using a proprietary algorithm, Google identifies AdWords (specific Google keywords) that are contextually relevant to your Web site. Based on these AdWords, Google generates ads and displays them in your AdSense box. These ads are the same ones that would appear on the right side of a Google search results page after you had searched a particular keyword.

In order to generate codes for Google AdSense boxes, you first need to have a Web site in place that contains quality content. This content cannot be vulgar, hateful, or pornographic in nature. You then sign up and wait to be accepted by Google.

To increase your chances of acceptance, it helps to have a Web site that contains informative and interesting content that is focused on one or two topics at best. By having targeted traffic coming to your site, you will also increase your chances of making revenue from the AdSense boxes that are created by Google.

Web sites that are well-placed for income generation include sites that have several pages containing a minimum of 200 words per page. There should also be postings to your Web site, and the postings should be updated daily. Comments on your content are also a good thing, and long comments should be considered for independent posting to your site.

To explain Google AdWords a bit more, these are the ads that are the source of your AdSense income. Google uses AdWords as a way to "purchase highly targeted cost-per-click (CPC) advertising". So, if you wish to sell a product, you may employ Google AdWords ads as part of your advertising campaign.

As mentioned before, Google AdWords ads are displayed by Google on its search engine results page. To create a Google AdWords ad, you will need to specify which keywords a visitor must input into the search engine before your AdWords ad will be displayed. Additionally, you need to set just how much you will pay Google for each click that occurs on your AdWord ad.

Google also uses something called AdWords Ranking to determine where to place your ad in the search results. This is determined by several factors: the CPC (cost per click), the CTR (click through rate), and the relevance of the ad text. The basic value formula is CPC x CTR. As value increases, so does your ad ranking, leading to your ad being placed higher in the search result rankings.

While either CPC or CTR can be low or high, Google typically requires that the minimum CTR be around 25%. This way, Google will make about 15% of the click revenue, and the AdSense subscriber will make the other 10%.

Now that you have a better understanding of Google AdSense and AdWords, you can see why keyword optimization and analysis is so important, and also why certain keywords are more valuable than others.