What is AdSense?

AdSense is an Internet advertising system run by Google. Advertisers sign up to Google’s AdWords program and use the system to create an ad. That ad is usually a short text commercial, like a classified, that includes a headline, two short lines of text and a link to a Web page. It might also be in a rich media format such as graphic image or a video.

The advertiser sets a monthly budget and decides the maximum amount that they’re willing to pay each time someone clicks on their ad. If no one clicks on their ads, they don’t pay.

The advertisers though don’t usually choose the sites that those ads are going to appear on. It’s an option, but most advertisers don’t take it, preferring instead to influence placement generally through the use of keywords and bid price.

They rely on Google to look at all the relevant websites in its AdWords content network and decide which are the best sites to run their ads.

That’s AdSense’s job. Publishers sign up to AdSense and receive a code that they paste onto their Web pages. That code contains a bunch of information, including how the publisher wants the ad to appear, whether there are any ads they don’t want, and an identity tag that lets AdSense keep track of earnings, among other things.

But the most important task that the AdSense code does is to tell the AdSense system to place an ad in that spot.
AdSense takes the ads that it’s received from AdWords’ advertisers, and distributes them among the publishers and websites that have signed up to AdSense and receive a code that they paste onto their Web pages. That code contains a bunch of information, including how the publisher wants the ad to appear, whether there are any ads they don’t want, and an identity tag that lets AdSense keep track of earnings, among other things.

But the most important task that the AdSense code does is to tell the AdSense system to place an ad in that spot.
AdSense takes the ads that it’s received from AdWords’ advertisers, and distributes them among the publishers and websites that have signed up to AdSense. Google is pretty cagy about the number of publishers that AdSense serves but in a blog post in 2010, the company mentioned a figure of over one million. That’s a lot of places to serve those ads.

What makes AdSense really special though isn’t just its size (which helps make it attractive to advertisers.) It’s the matching technology.

Google matches its AdWords ads to its AdSense publishers through a combination of different criteria. The keywords the advertiser has included with their ads will be one criterion. AdSense “reads” each Web page in its content network — the pages that carry AdSense’s code — and matches the keywords on those pages with the keywords supplied by AdWords’ advertisers. It also matches the ads to the keywords entered into the Google search engine, posting the ads next to the search results.

User behavior is another criterion. A page about astronomy, for example, could show ads for books and telescopes but if AdSense can see that the last three sites the user visited were about astrology, then it might offer an ad for astrology charts as well.

And price will be a factor, too. AdSense multiplies the maximum cost-per- click set by the advertiser with a score based on the ad’s click rate to determine the order in which ads appear in a unit and, in part, on which sites they appear.

Exactly how AdSense makes all these calculations is complex stuff, and Google doesn’t explain exactly how it does everything. As we’ll see, it is possible to influence the ads that appear on your Web pages — and it’s important to use that influence — but for now imagine AdWords as a funnel into which advertisers pour their ads, and AdSense as the tube through which Google directs the flow outwards onto Web pages.

Once the ads are on the site, Google charges the advertiser for each click an ad receives. For ads placed in Web pages, the company passes 68 percent of that revenue to the publisher, and keeps 32 percent for itself.

The calculations used to distribute the ads might be complex but the principle is simple enough. And it works. In the first quarter of 2013, Google reported revenues from its network alone — that’s publishers using AdSense — of $3.26 billion — 25 percent of the company’s total revenues.

That means that just in January, February and March of 2013, Google would have paid out to its website publishers over $2 billion.

Clearly, not all of those publishers are making a lot of money. But many are. Google doesn’t cap the amounts that it can pay its publishers so those publishers who know how to optimize their AdSense units, produce content that people want to read and bring in visitors can end up holding giant checks. Back in 2006, Markus Frind, owner of Plenty of Fish, a free dating site, showed off a check that he’d received from Google for CA $901,733.85.

That check represented just two months’ income.

What AdSense Is Not So AdSense is an advertising system. It’s a program that matches adverts submitted by advertisers to publishers who have signed up to receive them.

It’s the matching technology that ensures users see ads they’re interested in that has made AdSense such a huge success.

But AdSense is open to everyone. Google will check a site that applies to join the AdSense program but as long your site isn’t pornographic, hateful, violent or generally nasty, Google will give you the chance to earn from AdSense.And that’s the best description of AdSense: it’s an opportunity.

It’s an opportunity that anyone can take and anyone can make the most of. You don’t have to be a website developer, a technology geek or the neighbor of someone who once went to school with a leading venture capitalist to use it. You just have to be willing to create a website, place content on it, add AdSense and bring in the visitors.

Anyone can do it, and anyone can use it to earn money with a website. But AdSense is not a get-rich-quick scheme. As we’ll see in Chapter 1, you can be online with a website in minutes. You can have ads running on that site a day later. But you won’t be making a lot of money yet. You might make a few cents as your friends and relations take a look at the site and click an ad. But that’s not going to be enough to make a difference to your life. Clicks from friends and family won’t be enough to let you give up the day job.

It will take time to produce enough content to attract visitors.

It will take time to build a reputation that will keep visitors coming back. It will take time to optimize your ads and figure out all of the best ways to turn your site into revenue.

It will take time, in short, to get rich.

And how rich you get will depend on how much work you’re willing to put into earning that money. Once the site is up and running, it can become a passive revenue stream. You can go on vacation for a week, come back and find that while you’ve been lying on the beach, your site has continued to bring in money.

But when you’re just starting out, that’s not going to happen. You’ll have to keep posting content, keep looking for new traffic sources, and keep testing ad options if you want to keep your income rising.

It’s work. It’s work that’s enjoyable, and it’s work that pays. But AdSense won’t make you rich quickly and it won’t make you rich effortlessly.

It might not even make you rich at all. For manysmall AdSense publishers, Google’s opportunity hasn’t bought them a mansion in Cancun and a private jet parked in their back yard. But it has allowed them to supplement their household income, build a second revenue stream or make a few hundred bucks a month on their own terms while still being available to ferry the kids to soccer matches and choir practice.

Whether you’re hoping to strike it rich with AdSense though or just create a helpful new income stream you will need to invest time into learning how to use it and put it to work.