From Wikipedia.org:
Google AdSense is an ad serving application run by Google Inc. Website owners can enroll in this program to enable text, image, and video advertisements on their websites. These advertisements are administered, sorted, and maintained by Google, and they can generate revenue on either a per-click or per-impression basis. Google beta tested a cost-per-action service, but discontinued it in October 2008 in favor of a DoubleClick offering (also owned by Google). In Q1 2011, Google earned US$2.34 billion ($9.36 billion annualized), or 28% of total revenue, through AdSense.
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 trafic-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.
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