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Thread: How does AdSense work? Do you pay for Keywords? I'm confused.

  1. #1
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    Default How does AdSense work? Do you pay for Keywords? I'm confused.

    I know someone is saying "Are you Kidding". I have been trying to understand Google, keywords and AdSense. If I start an Adsense campaign with Google doesn't it cost for all the keyword? Can someone give me the dummies version of how AdSense works and what it costs.
    I do not yet have enough traffic to even attempt it but I am slowly gaining momentum. I would like not to crash and burn because I don't know what I am doing.

  2. #2

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    Hm. it seems like you're mixing up Google Adwords and Google Adsense.

    Google Adwords is an advertising company. You create an advertisement, and then pay for each time someone clicks on your advertisements, and the amount of money you have to pay is dependent on the keywords that you choose. If the keywords you choose are more competitive (meaning that more people are wanting to create ads for that keyword), you will need to pay more.

    Of course, the question now is: How does Google Adwords advertise the advertisements?

    That's where Adsense comes in. Google Adsense is FREE to join. You set up advertisement blocks on your website with some copy-and-paste coding they provide you (a 300 width x 250 height advertisement block, for example), and advertisements of the same size will generate on your website inside those blocks.

    The advertisements that appear is dependent on what your website is about (contextual ads), AND if the person viewing your website is logged into their Google Account (they will then see personalized ads instead of contextual ads).

    Every time someone clicks on the Advertisements that you have displayed on your website, you get paid a percentage of what the advertiser paid. The percentage is never disclosed, but it's a share between you and Google Adwords.

    EXAMPLE

    Joe Smith is a famous Los Angeles chef that sells his own cook books. He created a one-page website to sell his books. He goes to Adwords and sets up an advertisement campaign. He creates a 300x250 advertisements and targets the words "good cook books", which costs him $10.00 per click.

    On the other side of the country, Amy Johnson is a New Yorker who has a cooking website that gets over 10,000 page views every day. She sets up a single 300x250 advertisement block on the sidebar of her website to generate revenue.

    Joe Smith's advertisements start appearing on her website. She gets $5.00 per click (the other $5.00 goes to Google).

    For every 1,000 page views on Amy's website, 5 people are clicking on Joe Smith's 300x250 advertisement (a 0.5% Click-Through-Rate, or CTR). She is getting $25 for these 1000 views.

    So that means on a daily basis Amy is making $250 from Google Adsense, and Joe Smith is paying $500 to Adwords for his advertisement campaign.

    Note

    I should note that realistically, advertisements from different people will appear on Amy's website, not just advertisements from Joe Smith. Because of this, the pay per click can range anywhere from a few cents to a few dollars.
    Last edited by Jay; 02-24-2014 at 07:59 PM.

  3. #3
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    What would be the advantage for me to spend spend money on an Ad Words campaign vs setting up an Adsence campaign?

  4. #4
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    BTW, Thanks Jay. You were correct, I have the two very confused.

  5. #5

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    Adwords is only good if you have an existing service or product. That way the money you make outweighs the money you had to spend on creating ads. Adwords is short-term, fast traffic but it's only good until you run out of money. Knowing what keywords to use and when to use them is the whole challenge with Adwords.

    As for Adsense, there is no such thing as an Adsense campaign. When we say "campaign" in this sense, we mean creating an advertisement. There is no advertisement-creating on Adsense. You're making money by allowing Google to put Ads on your website.

    So to sum up...

    You SPEND money on Adwords to get traffic to your sales page.
    You MAKE money on Adsense by allowing Google to put advertisements on your website.

    If it helps, think of your website like a highway with a wooden billboard on it. The billboard on your highway is Adsense. It's blank and it has nothing on it yet, but the space is there for potential advertisements.

    The whole process of Google putting an advertisement on your billboard and then paying you for it, that's Adwords. Instead of having to deal with potential advertisers, Google does the work for you, and in exchange they get a cut of the money the advertiser spends.

    If you are trying to make money online by putting advertisements on your website, then your focus should be on Adsense.

    I really wish Google used different names for Adsense and Adwords because I think the name confuses people. I know it confused me when I got started, haha!

  6. #6
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    You are the Man! That makes this whole process so much clearer and straight forward. I may be bugging the heck out of you from this point on so I hope you don't mind.

  7. #7

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    Quote Originally Posted by Carl Bennett View Post
    You are the Man! That makes this whole process so much clearer and straight forward. I may be bugging the heck out of you from this point on so I hope you don't mind.
    Haha not at all

  8. #8
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    Jay, you have done a terrific job of presenting this material. I know it will be helpful to a lot of folks.

    Carl, I would again point to this one critical factor, to use Adwords you need to have something you are advertising that you know results in adequate conversions (based on your free traffic usually). Having more traffic come to your site will not result in a higher percentage of folks buying, ordinarily.

    If you pay 50 cents per click, 1000 visitors will cost you $500.000. If you earn $700.00 from each 1,000 visitors very well, but if you earn $300.00 not so good.
    Good Success!

    Douglas County Master Gardeners
    Making money online is not difficult. What is difficult is the discipline one needs to stay focused on the process. —Kathleen Gage

  9. #9
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    Thanks James,
    You to are my Hero...........

  10. #10
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    Thanks for the thought, Carl.

    I think I will send a copy of your post to my wife and children!
    Good Success!

    Douglas County Master Gardeners
    Making money online is not difficult. What is difficult is the discipline one needs to stay focused on the process. —Kathleen Gage

  11. #11
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    LOL..........

  12. #12
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    Quote Originally Posted by James View Post
    Thanks for the thought, Carl.

    I think I will send a copy of your post to my wife and children!


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