How Google Adsense Works?

Google Adsense Tutorial
How Google Adsense Works?

Google Adsense advertising system invloves three different kinds of people:

Advertisers: Advertisers use Google Adwords program to advertise their Ads not only on the Google Search results, but also on the content pages of the external websites and blogs that participate in Google Adsense Program. They do this on either PPC (Pay-Per-Click) or CPM (Pay-Per-Thousand Impressions) basis. Advertisers can optionally select which websites they want their Ads to show on.

Publishers or Web site owners: Website owners and Blog owners participate in Google Adsense using which they place the Ads served by Google on their content web pages. They do this by placing a Javascript provided by Google on their webpages or blogs. Website owners has the option to choose various formats, colors and a whole lot of customization options using which they can control and blend the Ads according to the look of their websites. Google Adsense program also provides various performance monitoring options (such as channels) for website owners to track and maximise the performance of Ads on their web sites.

Website Visitors: When a visitor visits a Google Adsense Particepant's website, they see relavent Ads along side the content. If the visitor clicks on any of these Ads, Google shares an undisclosed percentage of the cost of that click with the website owner.

Hence this is how we can summarise the process of how Adsense Program works:

The website owner signs in to the program.

Ads are placed on the website according to:

AdSense™'s contextual selection and filtering criteria
the publisher's options (the publisher gets to filter ads)
the advertiser's option, in the case of impressions-based advertising (the advertiser can choose from a number of available sites)
The publisher receives an undisclosed share of the revenue from the ads.
AdSense is based on the PPC and CPM advertising payment models.

Pay Per Click: AdSense PPC advertisments are text ads that appear on your website according to its contextual selection and filtering criteria. When a site visitor clicks on the ad, the advertiser is charged a small amount, of which Google keeps some and pays some to the website owner.

Pay-Per-Thousand Impressions (CPM): AdSense CPM ads are text or image ads and are site-targeted. The advertiser pays each time his ad is displayed on a page (every time Google ad code is executed by a user's browser). The same, each time an impression is registered, a share of the money goes to the publisher. In this case the advertiser gets to choose the sites on which his ads will show.
Here's how things are going to work behind the scenes: Google centralizes the advertisement through AdWords and uses a contextual targeting algorithm for their placement, that is, sorts them out so as to place them on sites with specific appropriate content.

The strategy lies in the reasoning according to which surfers that visit a page might be interested in finding additional info or products on that particular topic. And it works if the website is good enough for the purpose. Hense by having an attractive website and keeping visitors interested so they feel the need to go further and find out more by clicking on the ads, a Website or Blog owner can benefit from the Google Adsense program.