Introduction
If you've never heard of Adsense then you're probably new to Internet Marketing & online advertising. Many marketers made a fortune with Adsense years ago but Google updates wiped out people's Adsense online real estate empires.
This guide will give you the basics & introduction to Adsense. For readers who are familiar with Adsense or have used it in the past, this guide will give you the latest news & what it means for your Internet businesses.
What is Google AdSense?
AdSense is an ad serving program developed by Google that enables website owners to easily put up ads on their websites and earn income from doing so. It has long been considered to be one of the most popular online advertising programs.
Aside from being able to provide extra income to those who use it, Adsense has become a very popular method of displaying ads among website owners due to its less intrusive appearance (as compared with other banners) and its ability to display advertisements that are, quite often, relevant to the host website. In addition, website owners are enabled to customize the look of the ads to some degree.
The advertisements shown in an AdSense ad unit are administered by Google and are generated/displayed on a website based on the website's content and the user's geographical location, among many other factors.
The ads, in general, are divided into two types—cost-per-click (CPC) ads and cost-per-mille/thousand (CPM) ads.
With CPC ads, publishers (or those who put Google ads on their pages/sites) earn whenever visitors to their sites click on the ads. CPM ads, on the other hand, generate income for every thousand times an ad is displayed.
A Brief History of Google AdSense
Google's AdSense program is said to be derived from (or built on) a lexical database called Wordnet developed by a team of researchers at Princeton University led by George Miller. However, there are claims that Google copied its program from one that was developed by Applied Semantics (formerly Oinigo, Inc.) which bears the same AdSense name and is also a contextual ads program. Applied Semantics' AdSense, by the way, is powered by the company's patented CIRCA technology which is capable of understanding and extracting the key concepts from websites and information repositories in a way that mimics human thought and enables more effective information retrieval.
What complicates the story even more is that there are a handful of people (e.g., Susan Wojcicki and Paul Buchheit) who have claimed (or referred to) as the one who developed Google's program.
Although the origins of Google's AdSense remains to be a cause for debate, there's no doubt that Applied Semantics was the originator of the name “AdSense”, a service which it announced of in October 2002 and launched the following month.
At around the same time, Google piloted its own contextual ads project on a few small sites. The company went fully live with its project after a few months in March 2003.
In April 2003, Google acquired Applied Semantics along with its contextual ads product, AdSense. The acquisition was, according to Sergey Brin (Google's co-founder and president of Technology), to “enable Google to create new technologies that make online advertising more useful to users, publishers, and advertisers alike."
Less than two months after the acquisition, in June 2003, Google renamed their context ads program to AdSense.
Google AdWords
In late 1999, hardly a year after the company was incorporated, Google started testing a program that would sell ads on a CPM basis (the popular and dominant ad model at the time). Surprisingly, instead of the popular banner ads, Google sold only text ads which were generated based on the search terms used by people when they search on Google's search engine.
Advertisements began appearing on Google.com in January 2000... but the program went off to a bad start... it wasn't making much money.
Due to its disappointing performance, Google planned to turn all of its inventory over to DoubleClick (the largest banner ad business at the time). However, before anything could happen, the internet bubble burst (in Spring 2000) and took down with it the online ad banner market.
In the wake of the crash, Google introduced a self-serve model for buying text ads, and idea which they got from GoTo.com. And, soon after, they introduced AdWords (August 2000).
In February 2002, Google introduced a new version of AdWords which adopted the pay-per-click auction model. This model allowed advertisers to bid on how much they will pay for each click their ad gets.
However, unlike in other programs where advertisers can buy their way to the top of the listings (i.e., highest bid gets the most exposure), Google didn't allow such on theirs. They took a different approach.
Google employed the clickthrough rate into the ranking algorithm to measure an ad's relevance, forcing an economy of relevance and profit into the pay-per-click model.
Using the clickthrough rate as a factor in determining the ranking of ads, advertisers need not shell out great sums of money to get to the top of the list. And this proved to be very popular among advertisers.
Because of this, AdWords has since become Google's main source of revenue earning the company an estimated $21 billion in 2008 alone. And, it wasn't only Google who benefited...
Advertisers were connecting with their customers and, with AdSense, publishers were also raking it in... that is, until Google made some changes to their AdWords program.
Google changes that ended the Adsense gold rush
On November 22, 2005, Google started allowing advertisers to bid a separate price for ads that displayed in search results and ads that displayed on content partners sites. This move drastically brought down the minimum bids for ads on content partners sites, pulling down with it the CPC.
In mid-2006, Google introduced the “Quality Score “ and made it a factor in determining the minimum bid required for one's ad to run. Google did this supposedly to protect the trustworthiness and credibility of Google Ads, as well as to increase the quality of the sites that Google presents in its ads.
Quality score is determined by several factors, including clickthrough rate, ad copy relevance, landing page quality, landing page load time, and geographical location, among others.
Along with the enforcement of Quality Score, Google required (among other things) that landing pages be highly relevant to the ads and serve as an extension of the ads. If these conditions are not met, they are seen as low quality landing pages and, as such, will result in the need to bid higher to compete in the auction.
These updates have caused many publishers and online marketers' earnings to plummet overnight, some by as much as 98.85%.
Don't get me wrong, there's no doubt you can still make money from Adsense, but do not expect to be able to live off of it. Its time has passed.
Latest AdSense Update: Third-Party Ad Serving
In late August 2009, Google sent out an email announcing of its latest update for Adsense. According to Google, the update is designed to help AdSense users/publishers generate the maximum revenue from their ad units by allowing multiple ad networks to show on their pages. This, in effect, will pit advertisers from external Google-certified networks against AdWords advertisers in competing for ad space. And, the ad generating the highest revenue for publishers will get the prime advertising real estate.
When the new update takes effect, publishers will have control over which networks they will allow to show ads on their pages. They may also choose not to accept any ads coming from the third-party networks.
A copy of Google's email about the recent update is added below.
From: Google
Subject: Enabling multiple ad networks in AdSense to generate higher revenue
Hi,
We're writing to let you know about an upcoming update in your AdSense account designed to help you generate the maximum revenue from your ad units. You'll soon be able to allow multiple ad networks to show on your pages, which means that advertisers from external Google-certified networks will be able to compete with AdWords advertisers for your ad space.
If you're unfamiliar with what ad networks are, they're companies that partner with advertisers and publishers to buy and sell ads on sites they don't own themselves, similar to AdSense. Ads from these networks will compete with Google ads to show on publisher sites, and the ad generating the highest revenue for publishers will be displayed.
To ensure the quality of the ads appearing on your sites, we're certifying all participating ad networks for adherence to our standards for user privacy, ad quality, and speed. You'll also have control over which networks can show ads on your pages -- you can choose to opt out of receiving ads from specific networks, or all networks completely. This means you can continue to show ads from only AdWords advertisers if you'd like.
Finally, some ad networks use tools similar to Google's interest-based advertising to show more relevant ads to users on the sites they visit. These ad networks won't be permitted to collect data from your site for the purpose of subsequent interest-based advertising, but we'll allow those who comply with user privacy guidelines to show ads using these tools. You'll have the ability to opt out of showing ads based on user interests from these ad networks, and we've changed our requirements for third-party ad serving to reflect this. More information is available athttp://adwords.google.com/support/bin/answer.py?answer=94230 .
These new capabilities will automatically be enabled for your account, and you'll see a new section in your Ad Review Center where you can allow or block specific ad networks. Please note that we'll gradually be adding new ad networks to AdSense accounts over the next few months, so you won't see any immediate impact on your ads or your earnings.
To learn more about this launch and managing the ad networks appearing on your pages, visit the AdSense Help Center at https://www.google.com/adsense/support/bin/topic.py?hl=en&topic=13522 and watch our video demo at http://www.youtube.com/watch?v=4HyJPOVLd3I .
Bonus Material
How To Triple Your Google AdSense Earnings
One tactic that can significantly increase one's Google AdSense earnings is by placing Google Ads (more specifically AdSense for feeds) after every post summary in his/her site's feed.
Adsense for feeds, as the name suggests, lets web publishers earn by allowing them to place targeted ads on their feeds. It works very much the same way as the rest of the Adsense program such that it delivers ads that are relevant to the content of the site/feed as well as to the readers. And like other AdSense ads, feeds are paid either by click or by impression.
But before putting this tactic into practice, it is advised that one must take into consideration the possibility of diverting traffic away from the site as a result of visitors clicking through the ads.
One must also carefully study and weigh out the possible revenues that one can earn from having visitors click on the ads as compared to having visitors buying the site's promoted products.
With the aforementioned considerations, it is evident that this tactic is much more suitable for marketers who are only starting out and who has not yet joined too many programs.
Although there's a possibility that seasoned marketers (who have fully-developed sites) will run the risk of losing revenues with this tactic, it is also possible that they will increase their overall revenue.
