Google AdSense is a program run by Google that allows publishers in the Google Network of content sites to serve automatic text, image, video, or interactive media advertisements, that are targeted to site content and audience. These advertisements are administered, sorted, and maintained by Google. They can generate revenue on either a per-click or per-impression basis. Google beta-tested a cost-per-action service, but discontinued it in October 2008 in favor of a DoubleClick offering (also owned by Google). In Q1 2014, Google earned US $3.4 billion ($13.6 billion annualized), or 22% of total revenue, through Google AdSense. AdSense is a participant in the AdChoices program, so AdSense ads typically include the triangle-shaped AdChoices icon.
Google uses its Internet search technology to serve advertisements based on website content, the user’s geographical location, and other factors. Those wanting to advertise with Google’s targeted advertisement system may enroll through Google AdWords. AdSense has become one of the popular programs that specializes in creating and placing banner advertisements on a website, because the advertisements are less intrusive and the content of the advertisements is often relevant to the website.
Some webmasters put significant effort into maximizing their own AdSense income. They do this in three ways:
They use a wide range of traffic-generating techniques, including but not limited to online advertising. They build valuable content on their websites that attracts AdSense advertisements, which pay out the most when they are clicked. They use text content on their websites that encourages visitors to click on advertisements. Note that Google prohibits webmasters from using phrases like “Click on my AdSense ads” to increase click rates. The phrases accepted are “Sponsored Links” and “Advertisements”.
The source of all AdSense income is the AdWords program, which in turn has a complex pricing model based on a Vickrey second price auction. AdSense commands an advertiser to submit a sealed bid (i.e., a bid not observable by competitors). Additionally, for any given click received, advertisers only pay one bid increment above the second-highest bid. Google currently shares 68% of revenue generated by AdSense with content network partners, and 51% of revenue generated by AdSense with AdSense for Search partners. On June 18, 2015 Google announced rebranding of AdSense with a new Logo
Google launched its AdSense program, originally named content targeting advertising in March 2003. The AdSense name was originally used by Applied Semantics, a competitive offering to AdSense and then adopted by Google after Google acquired Applied Semantics in April 2003. Applied Semantics was started in 1998 by Gilad Elbaz and Adam Weissman. Some advertisers complained that AdSense yielded worse results than AdWords, since it served ads that related contextually to the content on a web page and that content was less likely to be related to a user’s commercial desires than search results. For example, someone browsing a blog dedicated to flowers was less likely to be interested in ordering flowers than someone searching for terms related to flowers. As a result, in 2004 Google allowed its advertisers to opt out of the AdSense network.
Paul Buchheit, the founder of Gmail, had the idea to run ads within Google’s e-mail service. But he and others say it was Susan Wojcicki, with the backing of Sergey Brin, who organized the team that adapted that idea into an enormously successful product. By early 2005 AdSense accounted for an estimated 15 percent of Google’s total revenues. In 2009, Google AdSense announced that it would now be offering new features, including the ability to “enable multiple networks to display ads”. In February 2010, Google AdSense started using search history in contextual matching to offer more relevant ads. On January 21, 2014, Google AdSense launched Direct Campaigns, a tool where publishers may directly sell ads. This feature was retired on February 10, 2015.