Google Adsense How it Works.

How it works

Google and Yahoo dominate the booming online search advertising business, which is expected to grow to $5.6 billion in 2008, from $2.7 billion in 2004. Profit from search advertising enabled Google to more than double its revenue in 2004, to $3.1 billion.

The concept — text ads that appear next to search results — works on a "pay-per-click" model. Advertisers pay only if someone clicks on an ad. To use the programs, advertisers buy "keywords" for anywhere from 5 cents to $100 a word. Those are the terms people type into query boxes when they're searching, such as "Atlanta wedding photographer" or "Omaha Italian restaurants."

AdSense works as a part of that keyword model; it's an offshoot of what Google calls its AdWords program, which competes against Yahoo's Overture unit.

AdSense is a bonus program for advertisers who use Google AdWords. Through AdSense, Google clients get to tout their wares beyond Google's home page — potentially reaching more than 200,000 participating Web sites.

Small Web site operators have flocked to AdSense as a way to attract advertising. To participate, they sign up at Google, which reviews the site. Once a small piece of computer code language is implanted on an accepted site, Google does the rest — matching ad links from its warehouse of clients to appropriate sites.

There's an art to optimizing a site to attract more links — and generate more revenue