How Adsense Work?

Google AdSense is a program run by Google Inc. that allows publishers in the Google Network of content sites to serve automatic text, image, video, and rich media adverts that are targeted to site content and audience. These adverts are administered, sorted, and maintained by Google, and they can generate revenue on either a per-click or per-impressionbasis. Google beta tested a cost-per-action service, but discontinued it in October 2008 in favor of a DoubleClick offering (also owned by Google).[2] In Q1 2011, Google earned US$2.43 billion ($9.71 billion annualized), or 28% of total revenue, through AdSense.[3]

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 Google AdWords. AdSense has become a popular company in creating and placing banner advertisements on a website, because the advertisements are less intrusive than most banners, and the content of the advertisements is often relevant to the website.

Many websites use AdSense to monetize their content; it is the most popular advertising network. AdSense has been particularly important for delivering advertising revenue to small websites that do not have the resources for developing advertising sales programs and sales people to generate revenue with. To fill a website with advertisements that are relevant to the topics discussed, webmasters place a brief HTML code 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. AdSense publishers may only place three ad units per page.

Some webmasters put significant effort into maximizing their own AdSense income. They do this in three ways

They use a wide range of traffic-generating techniques, including but not limited to online advertising.

They build valuable content on their websites that attracts AdSense advertisements, which pay out the most when they are clicked.

They use text content 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".

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. Google currently shares 68% of revenue generated by AdSense with content network partners, and 51% of revenue generated by AdSense with AdSense for Search partners.

history

Oingo, Inc., a privately held company located in Los Angeles, was started in 1998 by Gilad Elbaz and Adam Weissman. Oingo developed a proprietary search algorithm that was based on word meanings and built upon an underlying lexicon called WordNet, which was developed over the previous 15 years by researchers at Princeton University, led by George Miller.[5]

Oingo changed its name to Applied Semantics in 2001,[6] which was later acquired by Google in April 2003 for US$102 million.[7]

In 2009, Google AdSense announced that it would now be offering new features, including the ability to "enable multiple networks to display ads".

how adsense work?

The webmaster inserts the AdSense JavaScript code into a webpage.

Each time this page is visited, the JavaScript code uses inlined JSON to display content fetched from Google's servers.

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.[11][12]

For referrals, Google adds money to the advertiser's account when visitors either download the referred software or subscribe to the referred service.[13] The referral program was retired in August 2008.[14]

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.

source : http://en.wikipedia.org/wiki/Adsense