Google AdWords are the small text ads that are displayed on the side of the
search results in Google.
These ads are contextual. In this case the context is the search terms you entered.
The ads will be served based on what
you’re looking for. So, if you do a search on “printing services” you will get ads for
printing services along with your search results!
How does this generate money for Google and the advertisers?
Google AdWords works on a model known as pay-per-click.
When someone clicks on an AdWords ad, the advertiser of that ad has to pay Google a certain amount. It’s easy to track and fully automated.
We say “certain amount” because that amount is different all the time and is
subject to market forces.
Something has to determine the
placement of those ads, and what determines it is how much the advertiser offers to pay per click.
When you submit this kind of ads to Google, you submit it with a bid which is compared to other bids for similar keywords. It’s an auction style
The position of the AdWords ads is based on the bidding amount of keywords of
The higher the bid, the higher the position the bid buys you.
For instance, if the highest bid for the keywords “Internet marketing” is 80 cents per click, you can get top position by bidding 90 cents.
Then every time someone clicks on your ad, Google would charge you 90 cents, and you would retain the top position until someone else bids more for the same search word placement.