Small contextual ads published on web sites with the consent of the web site owner is Google Adsense. Publishers that are selling products and/or creating brand awareness create the ads. The created ads are called Adwords that is also a Google sponsored program.
Google Adwords and Adsense run hand in hand. Every time someone does a search on Google or one of their partner networks and clicks on one of the sponsored ads, then the person who created that ad will pay Google a predetermined price. This has become known as "pay per click".
Google has to split the money they receive from the creator or publisher of the ad with the person who owns or hosts the web site that the Adwords ads appear and that is the uniqueness of Adsense. Nobody really knows what exactly the split is as it is a well guarded secret, but it does vary and let's assume it is 50% for our purposes.
The host of the web site that displays the Adsense ad can receive .20 when that ad is clicked, if the publisher is paying .40 in total for the Adwords ad. Google keeps the remaining .20. So in effect, this is a partnership between the web site owners and Google.
Adsense is shown in the most appropriate manner possible. What does this indicate? Well, probably the best way to illustrate this would be through an example. Let's say Mary had a web site featuring women's clothing. Google Adsense once Mary decides to monetize her web site can help her to show ads on her web site that would be related to clothing or to be more specific, women's clothing. If a page of her web site was dedicated to shoes, then the Adsense ads appearing on that page would be for women's shoes.
So how do we determine the price per click? This is where the Adwords side of the equation kicks in. Adwords publishers place bids on various keywords. If a keyword is particularly sought after, then the publisher will pay more per click. Keywords range anywhere from a few cents to in excess of $50 per click.
It wouldn't be surprising to see someone making some nice money by putting Google Adsense on their web site and if their web site is generating a decent amount of traffic. Specific content is created by Internet marketers with the sole purpose of attracting high paying Adsense ads.
