what is google adsense and how it all works

Google AdSense is a web based ad display network and/or service run by Google to facilitate content creators and content websites to display advertisements to consumers or visitors. It is one of Google’s highest revenue generating programs constituting about 28% of the total revenue (atleast that is what I hear). This service acts as a bridge between the advertisers and content websites or publishers by providing both the parties with an easy to manage interface as well as hosting and managing the advertisements in the cloud.

It also does all the ad display decisions on the fly, such as when, where and which ad to display to maximize profits for websites. And Google takes a cut of the revenue while providing a good bang for the buck for the advertiser. It is the most popular advertising network available but not the only one.

Google AdSense is used by content websites who wants to monetize their content and generate revenue from the visitor traffic. The advertisers actually use a different program called the Google AdWords which interfaces with AdSense. This is one of the easiest ways to monetize your website especially if you do not have a revenue generating scheme already in place. This can also work with your existing revenue model. That means, though it works best for websites that generates a lot of textual content like a blog, it can also work on a retail website which already sell other products.

The revenue or the cost is calculated using one of two different methods depending on the what the advertiser has specified. It is either based on the clicks received (CPC) or based on the total impressions (CPM) of the ad. In the cost per click (CPC) model, the website gets paid only when a user clicks on an ad while in the Cost per “thousand” impressions (CPM) model the website gets paid every time the ad is displayed.

Google AdSense supports the display of many different types of ads.

  • Text Ads: The text ads usually contains a headline which is displayed in bold and a short description or tag line. Only text is used in this format.
  • Image Ads: These type of ads comprise of a static image in a standard predetermined size and format. These have to be manually pre-approved by Google before it can be displayed on the network.
  • Rich Media: This ad can several have interactive elements including a video. They are usually larger in size. These type of ads tend to have a higher CTR.
  • Flash: Flash based ads. Google has been gradually phasing out the Flash ads, and relying more on the HTML5 format.
  • HTML5: Mostly used to replace the Flash and Rich Media.
  • Animated Image: This is the gif images which supports some animation. There is also support for expandable ads.

How Google Adsense works

Google Adsense though easy, requires some amount of work on the part of the website administrator to get it up and running.  AdSense requires the webmaster to create ad slots or ad units in the AdSense web interface. This process provides you with a piece of javascript code. The webmasters will have to insert this code into the appropriate places in the webpages or the template in the site where the ads should appear.

When the webpage is loaded by a browser, the code gets executed and Google then matches the webpage with the appropriate and available set of ads. This is a complex process that includes the selection of all available ads based on website contenttargeting type, Click through rate, geographical location of the user, user history and many other factors. After that, all the selected ads go through a bidding process and the winner is elected and displayed on the webpage.

Google uses three main targeting types while choosing the ads

  • Contextual: The ads matched with the content on the webpage, the keywords specified by the advertiser and the advertisement stats.
  • Interest Based: The ad is matched with the known interests of the user, if there is any history data available about that particular user.
  • Placement: The ad is matched based on the preference specified by the advertiser.
Google AdSense GUI showing targeting types

There are also several other types of channels available for a content provider, in addition to the traditional website model,

  • Feeds: This allows the websites to monetize the RSS feeds.
  • Search: The custom site specific searches on your website can be monetized
  • Mobile:  The web administrator can choose run ads on the mobile websites.
  • Domains:The administrators of domains that are currently not being used can choose to run ads on them. They are also known as parked domains.
  • Video :  If the you have videos that run on websites like Youtube, then can also support the ads.
Google AdSense is definitely the best known and popular advertising network available. It is popular not only because it is easy to use but also because of the good sophisticated algorithm which does a good job of matching the ads to the content.