Wise Startup Blog

In this first volume of my new teaching series, I am going to teach you everything you can’t learn in business school through a series of videos, articles and personal training. My goal is to empower entrepreneurs to get the education and training they need that is so blatantly not being provided by our public universities.

What Is Adsense?

Adsense was originally Oingo, a private company that developed an algorithm designed to show ads next to certain words and content, and was later renamed WordNet. The underlying technology was buitl by Princeton since the 80s. The company changed its name in 2001, become Applied Semantics and Google bought it in 2003 for $102 million.

Adsense today is Google’s online ad network that enables anyone with a website to instantly display advertisements, and get paid. If you didn’t use Adsense (or any other ad network), you would have to find your own advertisers, charge them an agreed upon price, and then collect money from them every month. For a 1 man team, this doesn’t work out, which is why so many people use Adsense.

How Does It Work?

There is a lot of confusion for newbies about the difference between Adwords and Adsense. There is one main distinction.

With Adsense, Google pays you (for running their ads)
With Adwords, You pay Google (for running your ads)

Now that we know Adsense pays us, how does it work?

Advertisers design their ads, setup a price they’re willing to pay, sets up related keywords and targeting options, and then Google finds a place to place the advertisers ads across one of 1000s of sites. If your site is a match for the advertisers’ content, the ads are shown on your site.

As an example:

If I’m trying to advertise my link wheel SEO service, here’s what I would do:

1. Design an ad
2. Set targeting for the “Content Network” & United States only
3. Type in some targeted keywords: SEO, Google, Search Engine Optimization
4. Set my price per click $.15 or price per 1,000 views $.15 (CPM)
5. Set my daily budget $50
6. Hit Go

Now, Google is going to look through the “Content Network” and find any sites that have my targeted keywords using the technology from WordNet to determine a match.

Once they find a match, they will make sure my ad size fits on the selected site, and then display the ads.

If any of the ads on the site are clicked, I pay, and the website owner gets paid, and Google takes a small %, around 1-2%.

Pros and Cons of Adsense

Adsense is a great way to monetize a website, but it isn’t for everyone. Let’s go over the Pros and Cons.

Pros
- Easy to get setup
- Very high fill rate (ie you won’t have a lack of ads)

Cons
- Low payouts
- No control over the ads on your site
- Payouts take 45 days

Adsense is very powerful, it’s used by Ebay, Amazon, and a lot of top-tier sites to drive revenue.

How to Get Started

Anyone with a website can create a free Adsense account.

Setup your account and register your website so we’re ready for the next step in this Adsense tutorial.