How to Make Money With Adsense: How Adsense Works

In this ThreeMoneyMethods Traffic Tuesday video, we explain how Adsense works.

Transcript:
We are here today to talk about Adsense and what Adsense is. The reason for this today is actually I got an email from Sandra Marsh and she said, “hey Jonathan, thanks for the links (she was talking about the Three Money Methods report). But I was wondering if you could provide me with more on how these advertisements work.”

I did not quite understand the question, so I sent back an email to Sandy and I said, “which advertisements?”

And so she said, “Adsense and stuff like that; you mentioned it in the PDF.”

So, what I realized is that I’m starting too complicated; I need to start simpler and help people understand really what Adsense is and how it works. So Sandy, since you’re the one who was brave enough to ask the question that other people were not brave enough to ask even though they had the same question; we’re going to go ahead and do a quick video here to explain how Adsense “and stuff like that” works!

So on one side, you have someone called an advertiser. This is someone who has a product or a service that they want to sell. In the middle, you have Google and lots of people visit Google every day, but not everyone visits Google! Some people visit websites; websites about … whatever.

Let’s say this advertiser has a product dealing with digital cameras, let’s just say cameras over here. They’re trying to sell cameras. What they’re really good at is making cameras, making good deals on cameras, finding better technology for really producing good quality cameras.  So what they do is they say, well, there are lots of people; they’re visitors, here’s the other player in this, there’s visitors who are also called customers. There are lots of visitors or customers who come to Google everyday.

Now this advertiser knows that there are lots of visitors coming to Google every day and so they say, hey Google, could we run some advertising with you? And Google says, sure, no problem! I won’t charge you just to run an advertisement, I’ll only charge you when one of those visitors comes to me and searches for your product and then if they click, I’ll charge you. But if they don’t click, I won’t charge you anything. This is one way this works. There’s a lot of different ways that this works.

But the visitor goes to Google, looks for cameras; the advertiser runs an ad on Google and the advertisement redirects somebody actually back to a camera page. Now let’s use an actual example of Google to see how this is working.

So, we’ll do a search at Google for “cameras” or let’s go even more specific than that, let’s go “Nikon cameras.” Here are some people who are advertising: Walmart.com, OfficeMax.com, and BestBuy.com; those are all “sponsored” links. Then over here on the right-hand side, we also have Nikon digital cameras from Ritz Camera, they’re the advertiser; and we have Nikon digital cameras from Dell, eBay, Amazon, eCameraFilms.com, BHPhotoVideo (I love those guys by the way) and Nextag.com.

Those are all people who are paying to advertise on Google. Those are the advertisers in our equation; Ritz Camera and all those guys, that’s the advertiser and Google is the company they’re going to, to try to get people. Google doesn’t make money from these advertisers in most cases; in this example let’s say, until I actually click on one of these ads and I’m not going to click on that ad because that would cost Ritz Camera and I’m not actually looking for a Nikon digital camera at this point.

However, there are also people on the other side of this equation who have websites and I may not go to the advertiser’s website. I may not click on Walmart or Office Max or Best Buy, I might click on Nikon USA or I might just go to someone … here’s DigitalCamera-hq.com for example, I might just go to this website. So I might go to DigitalCamera-hq.com or I might go to some of these other websites. For example, I might go to DigitalCameraInfo.com because that sounds like maybe a good site for me to find out some more information.

Well, if I go to DigitalCameraInfo.com and if you look up top here, you’ll see this thing that says, Ads by Google. There’s another box over here that says, Ads by Google. But there’s one box up top here — an ad box with Ads by Google. Two different ad boxes there on this website, digitalcamerainfo. By the way, DigitalCameraInfo.com, you can pay me later! They didn’t know I was making this video, but I’m definitely advertising for them!

Anyway, if you look down the page here, there’s another advertisement, this is also “Ads by Google,” this is a display ad. In this equation, I’m the visitor and I’m coming to the website and I’m coming to find out more. Well, I went to Google, but didn’t click on the advertiser’s page; I went to a website over here. On that website, in the case of DigitalCameraInfo.com, there was an ad box up here, there was an ad box right here and there was another ad box right here. All that this website had to do in order to get Google to advertise or run those advertisements on their website, was to go to Google and say, “hey Google, I have a website, can you give me some code and I’ll put it on it.” So Google gives this person some code, that code goes in various places on the website and then once that code is on the website, Google is able to pull from its base of advertisers and put ads into those ad spaces on the website.

As the visitor, if I come to this page on the website and I click out to go to the advertiser, Google is going to make some money and so am I because I’m the owner of the website. This is a lot of arrows and it can get kind of confusing so if you want to watch the video again it will help to clear it up.

But on this side of things, it’s called Adsense. This is where you have a website about a specific topic, you go to Google, you throw some code on your page and when visitors come to your website and click on those advertisements, Google then pays you for having brought the visitor to that advertiser’s website. This advertiser pays Google some money and then Google shares that revenue with you. That’s called Adsense. That’s how Google makes money on the Adsense side of things and that’s how you make money on the Adsense side of things, by running some code on your website. Google figures out what your website is about and they display advertising on your website that you get paid for when people click from your website to go to an advertiser.

Hopefully that makes sense, if that doesn’t make sense, please comment below the video here and let me know how I can make it clearer. I’ve obviously, with all of these arrows, all over the place! This whole picture here, I probably didn’t make it really clear from a visual standpoint, but if you watch back through the video, you’ll see what happened with all those different arrows and what each one of them represents.

Hopefully that makes sense! That’s how Adsense works as a program. If you have a product or service to offer, then what you’ll want to do is look at Adwords which we’re going to cover, at least topically, in a different video.

Thank you very much for taking the time to visit ThreeMoneyMethods.com! Again, please comment below the video here if you have any questions at all about how this works. I’d be happy to answer them in another, upcoming Three Money Methods Traffic Tuesday’s video!

We’ll look forward to seeing you back here at ThreeMoneyMethods.com!

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6 thoughts on “How to Make Money With Adsense: How Adsense Works”

  1. Sorry I haven’t been responding lately! I had a lot of unchecked messages to sort through in my inbox, as I’ve been really busy with school. I watched the video and wanted to say thanks for answering the question. I’m thinking I’d like to use Google’s AdSense with my blog, which I’m still figuring out.

    On a side note, do you have any suggestions on how to make the most of Blogger?

    Sandra Marsh

  2. Hey Sandra!

    I’m happy you watched the video and hope you got some good tips out of it.

    I will be making a video at some point on this topic. Generally speaking, I would view Blogger as any other tool – a way to drive traffic back at your own web site. if you use Blogger, Google owns the content you create. I’m fine with them owning the content I distribute to them, but I don’t want to host my entire site on Blogger because then Google (technically) can come in and take over whatever I’ve built.

    Hope that makes sense? I’ll be making another video to cover this topic as well (How to make the most of Blogger) but that’s my general feedback.

    :)

    Warmest,

    Jonathan

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  4. Thanks Jonathan ! Now I think I understand the basic mechanics of Adsense. But what if … I have an Adsense deal with Google that results in a competitor showing-up on my Webpage. Is there anyway to filter out competitor ads?
    Thank you

  5. Hey Kathleen,

    You can absolutely filter out the ads you want to show up vs. the ads you don’t want to show up. You can manage this from inside of your Adsense login.

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