How Does Google Adsense Work?

The concept is simple: The publisher or webmaster inserts a java script into a website. Each time the page is accessed, the java script pulls advertisements from Google's Adsense program. The ads are targeted and related to the content contained on the web page serving the ad. If a web surfer clicks on an advertisement served from Google, the webmaster serving the ad earns a portion of the money that the advertiser is paying Google for the click.

Google handles all the tracking and payments, ultimately providing an easy way for webmasters to display content-sensitive, targeted ads, without the headache of having to solicit advertisers, collect funds, monitor clicks or track statistics, any of which could easily become a full-time job.

While Google Adsense, like many pay-per-click programs, is plagued by claims of click-fraud, it is clearly an effective revenue source for many reputable web businesses. There seems to be no shortage of advertisers in the Ad Words program from which Google pulls the Adsense ads. Webmasters seem less concerned by the lack of information provided by Google and more interested in cashing their monthly checks from Google.

The Evolution of Adsense

While Goggle's initial system was fairly rudimentary, only providing publishers the option of displaying a handful of advertising formats, the technology behind even the first ads was anything but simplistic. The technology used to employ Google Adsense goes far beyond simple keyword or category matching. A complex algorithm is used to determine the content contained on the web page serving the ad. Once the content is assessed, and appropriate ads that contain related content are served.

Early on, Google implemented a system that allows publishers to filter advertisements from competitors or sites which they deemed inappropriate. Google also allows vendors to specify an alternative advertisement, in the unlikely event that Google is unable to provide related content ads.

The Progression of Google

Google has come a long way in understanding the needs of publishers and webmasters. Google now offers a system that allows full ad customization. Webmasters can choose from twelve text ad formats and can customize Google advertisements to complement their website and fit into existing webpage layout. The options provided allow webmasters to select and create custom color palettes that match an existing website's color scheme, making the ads a much more natural fit.

Many sites have been able to integrate ads into their site design using different ad formats.

Sample sites with integrated ads:

Online Reports

Google recently took a huge step forward, providing publishers the ability to track their earnings based on webmaster-defined channels. Recent improvements to the Google AdSense reporting have resulted in webmasters having the capability to monitor an ad's performance with customizable online reports that can detail page impressions, clicks and click-through rates. Webmasters now have the ability to track specific ad formats, colors and pages within a website. Webmasters can quickly spot and track trends. The new flexible reporting tools allows webmasters to group web pages by URL, domain, ad type or category, providing webmasters insight into what pages, ads and domains are performing the best.

Reporting is real-time, allowing webmasters to quickly assess the effectiveness of any changes. The new reporting makes it significantly easier for webmasters to optimize and increase click-through rates. Optional reporting allows webmasters to monitor traffic, viewing both ad impressions and page impressions.

Advertisers realize the benefits associated with having their ads served on targeted websites, increasing the likelihood that a prospective web surfer will have an interest in their product or service.

Truth Still Not Revealed

Google still does not reveal what percentage of the advertising revenue earned is paid to the webmaster serving the ads, but they have made strides related to disclosure , recently lifting the ban preventing webmasters from disclosing the amount they earn through serving Google ads.