What is Adsense? Adsense comes from Google and is related to Google Adwords. It is a way for you to make money from your website or blog.

You are likely familiar with the advertisements displayed to the right and sometimes at the top of your search results in Google. Adsense extends those Adwords ads out to the web into yours and my websites and blogs.

In both screens below, the ads are based on keywords.  The big difference is that Adsense ads rely on the blog subject and website content to figure out the best ones to display. Adwords ads are displayed based on what keywords you search on.

Here are Adsense ads in action:

Before we go on, I want to make clear that I’m talking about Google’s Adwords and Adsense ads at a very high level. Google puts a great deal of effort and mathematics into deciding which ads get displayed in search or in Adsense. I’m just pointing out that the fundamental thing that matters to you and I is that keywords and content drive what ads get displayed.

If you’ve ever used Google Adwords, you may have seen a place in the ad setup process where you can choose whether your ad will appear on the Google Display Network (formerly known as the Content Network). This is how advertisers decide whether or not they want their ad to be used via Adsense or in Gmail, for example.

What is Adsense? It’s A Way To Generate Revenue

When a visitor clicks on one of the Adsense ads, you get paid. This is a very powerful way to make money from your website or blog. If you have a website or blog, you should sign up for an Adsense account with Google.

After you log in to Adsense, you can create a customized window for the Adsense ads to be displayed in. You can do this in Google Adsense and then copy and paste the javascript code they give you into your pages.  Or, you can include ads easily if you use major blog software such as WordPress, Tumblr, or Blogger.

How do you get paid? When an advertiser sets up a ‘campaign’ in Google Adwords, they agree to pay a maximum amount per ‘click’ for the ad. This is called CPC or Cost-Per-Click.

Google has a special algorithm for figuring out exactly how much the advertiser will pay for the click based on a variety of factors. Obviously, Google takes a share of the CPC value and that is a way they generate revenue.

When an ad is displayed via Adsense (through the Google Display Network), Google shares a piece of the CPC revenue with you, the site owner.

Note a couple of key things here as it relates to generating revenue from Adsense. First, ads are displayed based on the content of your site. Second, visitors need to click the ad (and when they do, you get paid, but you also lose that visitor). Third, you need traffic. Oh, and you’re not allowed to click your own ad.

If you don’t have a website then Adsense isn’t a way for you to make money (yet).  If you have a site but little or no traffic, then Adsense isn’t going to make you very much money.

To summarize, we have answered the question of what is Adsense. It is a way for advertisers to extend their reach beyond search pages out into yours and my websites and blogs.  In return for agreeing to place Adsense on our websites, we get paid a share of the cost-per-click that the advertiser paid for the Adwords ad.