AdSense vs AdWords & The PPC

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We often find that people are confused about the difference between Google’s two powerful ad engines – AdSense and AdWords. And part of this confusion comes from a lack of understanding
their pay-per-click (PPC) foundation, so we looked to one of our favorite referral sources (Gossamar’s “Glossary of Marketing Automation Terms“) for the breakdown.

AdSense is an advertising program from Google. It displays ads on pages for which the ad’s Keywords match the keywords on the page. The program is aimed at website owners who wish to generate income from the site and who are paid by Google for each time the ad is clicked (or, in some cases, for each impression). The ads may consist of words, images, or video streams, or any combination of both.

AdWords is Google’s program for PPC advertising. The two programs intersect when Google provides a PPC Ad to a 3rd party site and pays it a fee.

Pay-per-click Advertising is a subset of SEM and revolves around paying for ads to run on websites. In many ways, PPC is the new form of paid-for commercials which supplement (or replace depending on your company and industry) the more traditional forms of advertising in print, on the radio or TV.

The costs for running any specific ad are calculated by the site on which it’s going to run (Google, Yahoo!, etc), the specific keyword or search query targeted by the ad, the desired location on the page, and the contract length.

For example, an ad which uses a very popular keyword or keyword phrase will cost more than ads using less popular keywords. Google’s program, AdWords, sets the cost of an ad via an auction to arrive at the Cost-Per-Click, or CPC. The highest bidder wins the “pole position” or to the most desirable location on the page: the top of Google’s search results, for example, or the top of the RHS sidebar of PPC ads on the same page. Obviously, longer term commitments to run an ad are often rewarded with lower costs per click.

The ads are displayed when a visitor’s search query matches the ad’s keywords and there is still some budget available to pay for a potential click. In essence, the display of the ad is free, and advertisers pay only for each click on the ad. Google has recently introduced a more sophisticated form of Adsense ads in which advertisers pay only for a specific Conversion Goal.