How does the advertisment program of Google works?

My research question is How does Google works? My partial question for English is How does the advertising program of Google work? I chose this research question because i use Google very often and I like to work with computers.

There are 2 parts of the advertising program:

• Adsense (This part shows the ads)
• Adwords (This part is for the advertisers)

Adsense:

With adsense web masters can earn a little money with their website’s. For every click on the ad he gets a few cents, depending on the advertiser and Google. Since March 2009 Google can also shows what you earned in euros, instead of dollars.

Web-masters can place a little piece of code on their website, which shows ads. There are 2 ways of advertisements:

The classic text or banner advertisement:

And search engine of google on your site:

If you have some space left on your web-site you can place the classic one. Some people used the search engine very smartly. A good example is www.blackle.com. They made a search engine that saves energy, because of the black background. But what this site actually does, is make money for every search. Because global warming is a hot subject, Blackle is also hot. This way they make a lot of money.

Adwords:

In Adwords advertisers can place their ads on Google or the site’s of the webmasters. If you search for something, like a dvd, you will find ads in the right, or at the top ads. You can set a price per click and a maximum budget per day. When you set your ppc (price per click) higher, you will get higher in the search result. What you will pay depend on the advertiser under you. You will pay the same as him + 1 cent. That way Google wants to keep there their advertisers. For the word dvd you will pay sometimes 5 dollar ppc. But for other words, like “dvd bick buck bunny” you will pay just 15 cent.

Sources:

https://www.google.com/adsense/login/nl/?hl=nl