How Does AdSense Work?

First, Adsense is one half of a Google advertising program. As you have a blog, I'm assuming you know who Google is (the company that sponsors your blog or provides you the ability to create a blog for free). The other half of the program is called AdWords.

AdWords -> is directed towards Advertisers
AdSense -> is directed towards publishers (anyone with a website or blog)

Google sells ad/copy space to advertisers through the Adwords program. They purchase this space from publishers, such as yourself, through Adsense. Unlike traditional advertising, Google does not charge their advertisers to place their advertisements in a box or rectangle on a website. Instead they charge their advertisers, every time a reader (anonymous person on the internet) clicks on the advertisement. The amount of money that Google charges an advertiser for a reader's mouse click on an ad, depends on the going rate of advertising for the type of informational content on the website.

Example

Starts w/ Adwords
The going rate for advertisements related to DVD players is selling for $0.05 per click in Google's Adwords program.
Overstock.com (an online retailer) decides to purchase $1000 worth of advertising from Google for ads to be 'targeted' on websites that have content about DVD players. Overstock places a bid for this at $0.04 per click (just under the going rate)

Google accepts Overstock.com's bid and the deal is completed in AdWords. Overstock uploads their advertising script to Google, which will prepare to zap that across the internet to any websites that have DVD player content. As Overstock.com has paid $1000 for click throughs at 4 cents per click, this means they have prepared or prepaid for 25,000 clicks (called page impressions by Google). This means that Overstock will only pay the $1k once 25,000 people somewhere/somewhen on the internet have clicked on an Overstock.com ad. The Overstock.com ad when clicked upon will take that internet viewer directly to Overstock.com's website, where Overstock will attempt to sell them a DVD player and maybe something else.

AdSense Comes into Play
So you as an internet publisher (that's what you became when you created a blog :), do some research, and decide that you'd like to sign up for Google's Adsense (publisher) program. [I'll describe the sign up process in more detail below] You complete the sign up, and Google gives you access to their website where portions of html code [software program code designed for the internet browsers such as internet exlporer, the same code that powers your blog site and makes it look nice on the internet instead of just a bunch of lines and words run together].
You as the publisher highlight this code, and copy it, and then you open up the 'template' for your blog. You determine the area within your blog where you want the advertisement to show up, and you paste the code in that area. You then hit the preview button to insure that your blog with advertising still looks good and there are no errors. Once you have confirmed the look, you hit Save Template & Publish and your blog template is updated to include advertising code which will generate Google ads.
Now one day you happen to write an article. Lets say you write something that talks about the movie Narnia: The Lion, the witch and the wardrobe. In your article you descriptively refer to your 'DVD Player'. You publish your article to your blog and the article is now available on the internet. Google runs programs, called, 'bots' or 'sniffers' that read your blog as well as many of the webpages all over the internet. They do this so that their search engine will constantly have the best info available and they also do it so that they can 'target' their advertising through the adsense program.
As Google reads your artilce, the bot notices that you have a keyword 'DVD player' in your article. This information gets recorded in a Google database, and Google later looks through their Adwords and Adsense databases. They are looking to see which advertisers need advertising for the keyword 'DVD Player' and which publishers have websites with content related to DVD Player. They happen to make a match when they realize that Overstock.com is advertising for the keyword 'DVD Player' and that you are now an Adsense publisher that also has an article that mentions DVD Player. So Google reads the html code in your website that and everytime someone opens your site the html code points to a Google Ad, which appears now on your website in the location you dedicated to it in your template.
You receive 100 visitors to your website, and 10 of them read your article about Narnia that mentions a DVD player. One of the 10 people think to themselves, I need a new DVD player. They see the Overstock.com ad for DVD players, and they click on it. This surfs them over to Overstocks website. They may or may not buy a DVD player from Overstock, however Overstock has just realized the benefit of the Ad. Google has tracked the fact that a visitor from your site clicked on the ad. They charge Overstock $0.04 for that single click. Google receives $0.02 (2 cents), and they pay you the publisher $0.02 (2 cents). Its a 50/50 split!

A day goes by and you login to your Google account to check your balance. you see that you just made 2 cents. You think to yourself well that was pretty easy. You keep writing articles, more ads that relate to your articles show up, a portion of your readers occassionly click the ads and you and Google receive payment.

End of Example

Reflection on Example
OK, so it sounds like easy money. It is. It sounds like you could make a lot of money. You could. Does this happen to everyone? No, not really. The reality is that you can sign up for Adsense, and you may not make a lot of money. It depends on how many readers or visitors you receive to your website and how many of them actually click on your ads. You will receive payment for each click.

Some ads pay better than others. Some pay as little as 1 cent and some rare examples can pay as much as $75.00 per click(no lie).

Its been my experience that the average ad pays somewhere between $.40 & $.80. It depends on the content. Overstock may only be willing to pay 4 cents for clicks, while a trial lawyer maybe willing to pay $20 for an ad that attracts clients in to sign up for a great big lawsuit or something. Some consulting companies will pay about $1 or so . It just depends on the market rates.

How Much Upkeep is Required for AdSense

Upkeep.

You will need to learn a little basic html and will need to experiment with your blog template.

There are many many resources on the net that explain how to do this. I've found a lot of the info from my local library and form going online. You do not need to spend any money to take a course in web design to do this.

[Web designers can and do earn a lot of money from the Adsense program, so it could be a consideration for later down the road if you are looking for a new career, hobby or skill for your current career.]

At the end, you will get more out of the program if you put more in to the program. The strength of your content and your ability to draw and hold an audience will be keys to the level of your success.

It is advisable to check, update and reconfigure your advertising on occassion. No one wants to look at the same old website over and over again. Change brings a bit of fresh air. That said, don't make change for the sake of change. Insure that your efforts mesh well with your site.

Also track the results. If you make a change and see a slump in revenue, consider changing back or mending what you have done. keep track of what works for you and what does not work for you. Use your own common sense to guide you in your efforts. If you get stuck, ask questions!

Google Payment Methods and Taxes

How is it paid?
Google will pay you a check or direct deposit the funds once per month. There are a couple caveats.

First, you have to fill out all the required account information. You also have to fill out an online form at Google for taxes. Its a W-9, like a W-4 for wages.

A W-9 essentially identifies who you are. Google will report the income they pay you to the government for tax purposes. You will need to report the income when you file your taxes. You are essentially a contractor or partner of Google and not an employee.

NO TAXES WILL BE WITHELD BY GOOGLE.
PAYING YOUR TAXES IS YOUR RESPONSIBILITY. (Regardless of your country of residence)

If you earn a few bucks throughout the year, its not that big of a deal. There are people that have refined their websites to the point where they earn hundreds of dollars per month. This can have a bigger impact on your taxes, so pay attention. You may need to pay some of your google money back to the government for taxes.

Adsense Sign Up Process Description

The sign up process is realatively easy. You can sign up for Google's Adsense program from this site, see the white button above with the words 'Get targeted ads on your site with Google AdSense' - just click on it and follow the steps. Below is a description of the process you will encounter.

Step 1. You can click on the signup for adsense buttons from that site and it will walk you through the process.

Step 2. You will need to sign up with Google, provide some contact information, email, set up a password, and provide the website url

http://your~url~here.com (make sure you include the http:// portion)

Step 3. Google will send you an email to confirm your email address. You need to respond to this email which will trigger the next step.

Step 4. Google will then take 12-72 hours to review your website. They need to insure that there is no pornography or curse words nor violent content. (Advertisers through Google do not want to be associated with this type of content). You should not have a problem.

Step 5. Once they approve the site, they will send you an email. You will need to click on the link they provide, and then they will ask you to finish filling out the tax forms and identify the method of payment (check or direct deposit)

Step 6. You will now need to copy the Google ad code into your template and update your blog site.

Step 7. You keep blogging and watch a little money fill up your Google Account.

Step 8. When your account reaches the $50.00 level. Google will mail (usps) a pin number to you. You have to login to your google account and type in the pin number. This is to confirm they have the correct mailing address for you for check and tax purposes.

Step 9. When your account reaches $100.00 Google wil allow payments to be mailed to you on a monthly basis. So if you sign up for an account today, and earn $50 by the middle of May, you'll get a pin number by the end of May. If by June 23, you have earned $100 total, Google will turn your account on for automatic monthly payments. On July 3-7 Google will mail you a check for your total earnings on June 30th($100 + anything you earned from June 23 to June 30th.)

Step 10. Every month after that where you have a Google account balance of greater than $10.00, Google will pay you the balance in your account. If the balance is less than $10, Google will hold the funds until the amount exceeds $10. So if on July 31, you have only earned $9.50. Google will not cut you a check for July. However in August if you earn another 50 cents or more, they will cut you a check at the end of August for everything you earned in July and everything you earned in August. [Google doesn't want to cut checks for less than $10 at a time]

Don't Cheat on AdSense

Dont' Cheat!
Ok, so if you haven't picked up on it already, you may have asked yourself, 'What's to stop me or my kids, or friends from going to my website, and clicking on my ads all day long?'

If every single click pays you money, this can be very tempting. It is against the rules of the Google Adsense program. Google is a very smart company. They will figure it out, and shut down your account if the account is abused. When they shut down an account they do not always have to pay you the balance in the account. Better safe than sorry, Never click your own ads.

Don't let someone using your computer click your ads. Don't encourage or request your friends to click your ads. Now if your friends surf to your site, read your article and happen to find an ad that appeals to them and they click on it, that is perfectly fine. If your friend goes to your site and clicks on 3 of your ads, one hundred times, Google will ban your friends computer from generating revenue for you, and they may shut down your account. If you learn that someone is abusing the program or clicking on your ads, notify Google immediately and request that they block the person from your ad money so that your account is not terminated.

Importance of publishing small business websites and blogs

When a company starts to ramp up its marketing effort, the company will need something that becomes the message before the message (think tell them what you are going to tell them!). Then they will need a reminder of the message (think tell them what you told them).

Before a prospective new customer will agree to meet with a new vendor or service company, the prospective customer will typically want to check out the vendor or service companies credentials a bit. The typical way for most people to do this is via the web and via word of mouth referrals. If the prospective customer has not already received a referral from the vendor or service company, then the website can become one of the initial sources of referrals after a few referalls are published on a company website.

Once the customer gets the gist of what type of services or products are being offered, and decides that they are interested, a representative will meet with the customer and attempt to close the deal and sign them up.

Later as the customer considers the products and/or services offered, they may want to check out the provider again or other people in the customer organization may want to perform their own due dilligence, hence looking back at the provider website. After the customer officially signs up, they they may want to check in on your site from time to time or even use the site to refer your company to other potential customers or even learn about new products and services being offered. So the communications cycle will repeat itself.

Value of Business Blogs
In addition, sometimes companies want to explain the importance of various technical aspects of their services. Websites for your company need to be focused on the products and services.

Many companies today are using Blog's to publish articles less technical than a white paper that discuss the relative aspects of their companies work or services, the results of the services, or pitfalls of not receiving the services.

One of the handy things about blogs is that it can increase the reputation of your company by lending an additional sense of legitimacy about your expertise in your field. Basically, in writing about what it is that your company does people will start to look to you and your company as the experts you really are as opposed to looking at you as just another potential sales person.

Adsense Optimization Tips from Google

Take a look at these examples of how to place your adsense ads to get maximum revenue.

Inside AdSense: Link up