Please keep in mind, this is a very basic description of how the Google AdSense for Content product works. I have not implemented the other advertising tools, yet and there is a limit to what I can and cannot say about the service. Here’s what I can tell you..
Google is a search engine, so they have software running at their offices that searches everything it can find on the Internet. Google’s indexing engine, starts with a set of web pages it knows about and follows all the links it finds until it runs out of links. The indexing engine creates an index of words and phrases contained in each web page it finds. From this, Google can get a rough idea what the content is on a given web page.
These two factors limit the number of “ad impressions” your site can actually deliver, lowering your site’s value to the advertiser. This, in turn, limits the revenue you can generate from advertising. Now that I’m the one implementing ads, I see the AdBlock plugin I use in Firefox a bit differently–but not enough to stop using it. Google has acquired Doubleclick and Doubleclick uses various techniques including web bugs, cookies and other technologies to track anyone who has ever viewed a Google-placed ad. This is great for Google, Doubleclick and the advertisers, but terrible for the rest of us and our privacy.
Google claims you make money when ads are displayed and when ads are clicked on. This did not prove to be true for me. I only made money when ads were clicked.
Part III of this series will showcase my experiences during my first month using the Google AdSense product.