Pay-Per-Click advertisements (PPC).....

Advertisers specify the words that should trigger their ads and the maximum amount they are willing to pay per click. When a user searches Google's search engine on www.google.com, ads for relevant words are shown as "sponsored links" on the right side of the screen, and sometimes above the main search results.

The ordering of the paid listings depends on other advertisers' bids (PPC) and the "quality score" of all ads shown for a given search. The quality score is calculated by historical click-through rates and the relevance of an advertiser's ad text, keyword, and landing page to the search, as determined by Google. The quality score is also used by Google to set the minimum bids for an advertiser's keywords.^[2]

The auction mechanism that determines the order of the ads has been called a "generalized second price" auction. It is a variation of the Vickrey auction.

How AdSense works....

• In order to put ads on a web page, the webmaster adds a JavaScript code to its source code.
• Each time a visitor visits a page with an AdSense tag, the JavaScript creates an iframe, whose "src" attribute includes the URL of the page.
• For contextual advertisements, Google's servers use a cache of the page for the URL or the keywords in the URL itself to determine a set of high-value keywords. (Some of the details are described in the AdSense patent). If keywords have been cached already, ads are served for those keywords based on the AdWords bidding system.
• For site targeted ads, the advertiser can choose the page or sites it wants to display ads on and pays on a CPM basis (cost per thousand impressions).
• For referrals, Google manages the subscriptions on a long term, to add money when the visitors either download the product of subscribe, that depend upon the sort of product.
• For search, advertisements are added to the list of results and clicks on them make money.
• Since the JavaScript is sent to the browser when the page is requested, it is possible to others to copy the JavaScript on to their own web pages. To protect against this, AdSense hosts can set what pages their code is allowed to put ads on. In that case, clicks from other than the specified web pages are ignored by Google.

Overview...

Google uses its search technology to serve ads based on website content, the user's geographical location, and other factors. Those wanting to advertise with Google's targeted ad system may sign up through AdWords. AdSense has become a popular method of placing advertising on a website because the ads are less intrusive than most banners, and the content of the ads is often relevant to the website.

Currently, AdSense uses JavaScript code to incorporate the advertisements into a participating site. If it is included on a site which has not yet been crawled by the Mediabot, it will temporarily display advertisements for charitable causes known as public service announcements (PSAs). (The Mediabot is a separate crawler from the Googlebot that maintains Google's search index.)

Many sites use AdSense to monetize their content and some webmasters work hard to maximize their own AdSense income. They do this in three ways:

1. They use a wide range of traffic generating techniques including but not limited to online advertising.
2. They build valuable content on their sites which attracts AdSense ads which pay out the most when they get clicked.
3. They use copy on their websites that encourage clicks on ads. Note that Google prohibits people from using phrases like "Click on my AdSense ads" to increase click rates. Phrases accepted are "Sponsored Links" and "Advertisements".

What is Google AdSense?

Google AdSense, commonly just AdSense, is an ad serving program run by Google. Website owners can enroll in this program to enable text, image and, more recently, video advertisements on their sites. These ads are administered by Google and generate revenue on either a per-click or per-thousand-impressions basis.