Introduction to Google's Adsense

AdSense is an advertisement serving program run by Google. Website owners can enroll in this program to enable text, image, and more recently, video advertisements on their websites. These advertisements are administered by Google and generate revenue on either a per-click or per-impression basis. Google is also currently beta-testing a cost-per-action based service.

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

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

Many websites use AdSense to monetize their content. AdSense has been particularly important for delivering advertising revenue to small websites that do not have the resources for developing advertising sales programs and salespeople. To fill a website with advertisements that are relevant to the topics discussed, webmasters implement a brief script on the websites' pages. Websites that are content-rich have been very successful with this advertising program, as noted in a number of publisher case studies on the AdSense website.

Some webmasters invest significant effort into maximizing their own AdSense income. They do this in three ways:^{[citation needed]}

1. They use a wide range of traffic-generating techniques, including but not limited to online advertising.
2. They build valuable content on their websites that attracts AdSense advertisements, which pay out the most when they are clicked.
3. They use copy on their websites that encourages visitors to click on advertisements. Note that Google prohibits webmasters from using phrases like "Click on my AdSense ads" to increase click rates. The phrases accepted are "Sponsored Links" and "Advertisements".^{[citation needed]}

The source of all AdSense income is the AdWords program, which in turn has a complex pricing model based on a Vickrey second price auction. AdSense commands an advertiser to submit a sealed bid (i.e., a bid not observable by competitors). Additionally, for any given click received, advertisers only pay one bid increment above the second-highest bid.

How Adsense Works:

• The webmaster inserts the AdSense JavaScript code into a webpage.
• Each time this page is visited, the JavaScript code creates an IFrame with a src attribute set to the page's URL.
• For contextual advertisements, Google's servers use a cache of the page to determine a set of high-value keywords. If keywords have been cached already, advertisements are served for those keywords based on the AdWords bidding system. (More details are described in the AdSense patent.)
• For site-targeted advertisements, the advertiser chooses the page(s) on which to display advertisements, and pays based on cost per mille (CPM), or the price advertisers choose to pay for every thousand advertisements displayed.^{[9] [10]}
• For referrals, Google adds money to the advertiser's account when visitors either download the referred software or subscribe to the referred service.^[11] The referral program will be retired in August 2008.^[12]
• Search advertisements are added to the list of results after the visitor performs a search.
• Because the JavaScript is sent to the Web browser when the page is requested, it is possible for other website owners to copy the JavaScript code into their own webpages. To protect against this type of fraud, AdSense customers can specify the pages on which advertisements should be shown. AdSense then ignores clicks from pages other than those specified.