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All the web publisher has to do is put the AdSense code on the page. That tells Google that you want an image ad, or you want a 300 x 250 ad, or you want one to show both text and images. You get to decide that and Google decides which advertisers get to go there.So here’s how the money works. The companies that are advertising are paying for leads. All they want is traffic. So if someone clicks the ad, they have to pay. Google collects the money from their AdWords account, splits in half and gives half to the web publisher. So you’re not getting paid by Google per se, you’re getting paid by the company that is advertising.

Now a little economics determines how much money you get every time someone clicks. Some keywords pay a lot and some don’t pay hardly anything. Suppose Nestle, Cadbury, Land-o-Lakes and Godiva wanted their hot chocolate ad to show up on your webpage about hot chocolate. Now, there’s only one or two spots on your page, right? So the advertiser has to fight to get that spot.

When the advertiser joins Google AdWords they indicate to Google how much they’ll pay to be seen. Nestle might say that they’re willing to pay $1.00 per click. Cadbury has higher priced hot chocolate so they may be willing to pay $2.00 per click.  So when someone visits your page Google has to decide which ad to show. There are some other rules governing this, but for this conversation the $2.00 bidder wins.

That means the web publishers get $1.00 (for this example).

Now some of the hot chocolate companies want their ads shown for pages that talk about hot drinks. Cadbury doesn’t care about that term. They’ve tried it and decided they made no sales from people looking for hot drinks. But Nestle and Godiva still want to be there. Since that is not as good a keywords as “hot chocolate” and they likely won’t sell as much advertising there, the advertiser decides that keyword is only worth $.50/click.  Godiva feels the same way but bids $.51/click for the spot. So guess what? If your page is about Hot Drinks, you’re only going to make half of that ($.26/click). Not nearly as good.

(Yes, AdSense superstars, I understand that the shape of the ad matters because the people at Nestle might only have designed a 300 x 250 and thus they’re not bidding on the 768 x 60. But this article is not for you if you get all the little nuances of it. Move along I say).

The big deciding factor here is “commercial-ness”. I know that’s not a word, but this is the main reason behind how Google Adsense works. If the keyword sounds like someone is searching for something to buy, advertisers are willing to pay more for it. If the word is like “weather” and it doesn’t sound like the person is going to buy something, there might not be any advertisers at all and then you get generic, cheap Google ads or Pepsi or something.

Keywords like “California Personal Injury Attorney San Francisco” pay a ton. Sometimes those keywords pay web publishers $50 – $60/click. That’s a far cry from the $.32 you get for pages about cheese.

There are three great tools for figuring out how much keywords pay. I talk about it all the time, but BrainstormTools.com is a keyword tool that not only tells you supply and demand behind a keyword, but how much Google Adsense pays for it.

SpyFu.com is a service where you can just look up how much they pay. And the Google Keyword Tool does this too. In fact, that’s the only good thing about the Google Keyword Tool.

I hope that clears up how Google AdSense Works. The placement of the ad determines how well it is seen and clicked, but the content of the page is the one that dictates how much you get when the ad is clicked. (If you’d like to learn all the other little factors, come chat it up at FreeWeeklyMastermind.com and I’ll help you really optimize your page)