How does Google Adsense work and how does it make you money?

AdwordsCognite MarketingDigital Marketing

Google Adsense is a free tool offered by Google as part of their advertising network. It works hand-in-hand with Google Ads and allows you to monetize the traffic being directed through your website each day. The Adsense algorithm ensures that only content relevant ads will display on your website and this, in turn, makes it more likely that a visitor will click on an ad. Once they click on the ad, you start making money.

The process starts with Google Ads. A business owner will bid in a live auction for their ad to be displayed throughout the advertising network. This could be via text ads, image ads, or through various Google Search Partners. By signing up with Google Adsense, you are allowing those ads to be displayed on your website.

However, setting up Google Adsense is not a quick method to make money. It all depends on whether or not you have regular daily traffic and if those website visitors will click the ad being displayed on your website. This is known as the Click Through Rate (CTR). The most common type of website to implement Google Adsense is a blog. This type of website, if managed properly, can sometimes have thousands of daily visitors. The more people viewing the ad (also known as impressions), the better chance you have that the ad will receive multiple clicks.

You get paid 68% of the bid that the advertiser pays, this is known as the Cost Per Click (CPC). You have absolutely no control over this because it is controlled by Google in a live auction. The best way to get some measure of your success is to measure the Revenue Per 1000 (RPM – The M is the roman numeral for 1000). To calculate the RPM, you need to divide your estimated earnings by the number of impressions and multiply it by 1,000. Calculating your potential earnings through RPM will give you a sense of the bigger picture that CPC and CTR can’t. RPM shows how much money you make per visitor.

Estimated Earnings ÷ Impressions X 1000 = RPM

Since there is no ‘standard’ website layout, Google Adsense offers different ad options to suit your needs. There are 5 options to choose from:

  1. Text ads The ads appear as one or two lines of text format and include a title that’s also a clickable link to a webpage
  2. Display ads The ads appear in image format. You can choose the relevant size for your website.
  3. Link units Displays a list of topics that are relevant to the content of your page
  4. Rich media ads The ads appear in HTML, Flash, and video format.
  5. Mobile ads Monetize a mobile site designed for users of iPhone, Android or other high-end devices with browsers capable of executing JavaScript.

In order to maximise your potential earnings, you need to place the ads in the best location on your web page. Ideally, at least one ad should be placed above the fold. This refers to the part of your web page that shows without needing to scroll down, it makes it easier for visitors to see the ad straight away. It is not advised to push down your page content in order to show only the ad. Doing this will get you penalised by Google.

As with anything ‘Google’ related, you need to make sure to play by the rules and always make use of advertising and marketing best practices. The algorithms in place will root out any ‘hacks’ you have tried. Even if you have something that has gone undetected, it won’t be long before Google picks it up and potentially bans your account. Below are a few things to pay attention to if you don’t want to get banned on Google Adsense:

  • Don’t click on your own ads – This applies to you and anyone using your IP address.
  • Don’t manually edit the code – Google has made it extremely easy to edit the code using their platform. Editing the code manually prevents Google from tracking relevant ad performance which is a violation.
  • Don’t use robots to click ads – Using any automated tool to bypass the system for the purpose of inflating your earnings is illegal.
  • Don’t create a site specifically for ads – Google values quality over quantity every day of the week. If your website doesn’t have much content and is obviously used just to display ads, then you are putting your Google Adsense account at risk of being banned.

At the end of the day, your account will only be safe if you are using Google Adsense for its intended purpose. If you keep adding relevant and useful content, while keeping within the Ad Placement Policies, then you will continue to earn money.

Get in touch today to find out how to make use of Google’s advertising platforms.