How Does Google AdSense Works?

Google AdSense is a program by Google which allows Publishers, that are currently holding a valid Google AdSense account, to serve advertisements in the form of text, image and video on their online content. When someone views or clicks on those ad units both Google AdSense and the publisher gets paid. For more details read :  What is Google AdSense?

Google AdSense has now become the easiest way for publishers to earn a lot of money, through advertising on their online content. All a publisher has to do is to instal an ad code on their blog/website. These ad codes are not ordinary ad codes, these are smart ad codes. They first figure out what your site is about, and then based on the visitor's location and browsing history, display the most relevant ads.But how does AdSense works! lets find out!

How does Google AdSense Work ?

 As said earlier Google AdSense is an advertising program, so first off, Google need advertiser, these advertiser's provides ad units. Google then selects the highest paying ad units, after that Google searches for publishers, to place those ad units. When someone views or clicks on those ad units, on a publisher's site, the advertiser pays the earlier set  amount to Google which Google shares with its publisher's. The revenue share between AdSense and the Publisher, remains more or less a 70:30 split. Publishers get 70% of the revenue while AdSense keeps the rest 30%.

Google manages all this trading with the help of two programs AdSense and AdWords. In Google AdWords program advertisers bid on ad units and the highest paying ad unit wins Google then sends these highest paying ad units to AdSense. Now all AdSense has to do is look for publishers with relevant content that matches the ad units.

For more info on Google AdWords read : What is Google AdWords?

Consider this example:
Suppose I own a company called Apple and e have recently developed a new phone called iPhone 6, now I want to sell my product by advertising. What will I do? I'll sign up for Google  AdWords. In AdWords I found that I am not the only one selling smartphone there are others too. Plus the number of publishers talking about smartphones are limited. Now what to do? the only option left is to bid on keywords like smartphone, high-end mobile phones and expensive phones. Suppose I won the bid for expensive smartphone, company X won for high end smart phone and company Y won for smartphone. Now, Google transfers those three ad units to AdSense. Then AdSense looks for publishers talking about smartphone, high end smart phone and expensive smartphones. If AdSense finds publishers talking about those keywords it will display those ad units corresponding the keyword. But if a publisher is talking about all the above mentioned keywords, then the ads will enter into competition of which company's ad will be displayed. In this case the ad unit paying the highest amount wins.

For more info on how You get paid through AdSense read : Understanding AdSense