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There is so much talk about how the web changes traditional business models. In the most basic sense, a business model is the method of doing business by which a company can sustain itself — that is, generate revenue. The business model spells-out how a company makes money by specifying where it is positioned in the value chain.
Radio and later television programming has been broadcasted over the airwaves free to anyone with a receiver for much of the past century. The broadcaster is part of a complex network of distributors, content creators, advertisers (and their agencies), and listeners or viewers. Who makes money and how much is not always clear at the outset. The bottom line depends on many competing factors. Internet commerce gave rise to new kinds of business models. The web is also likely to reinvent tried-and-true models. Advertising is a perfect example. The Web has popularized the advertising model and broadened its applicability to a wide array of goods and services.
The web advertising model is an extension of the traditional media broadcast model. The broadcaster, in this case, a web site, provides content (usually, but not necessarily, for free) and services (like email, IM, blogs) mixed with advertising messages in the form of banner ads. The banner ads may be the major or sole source of revenue for the broadcaster. The broadcaster may be a content creator or a distributor of content created elsewhere. The advertising model works best when the volume of viewer traffic is large or highly specialized.
What is Google AdSense?
AdSense is an ad serving application run by Google Inc. Website owners can enroll in this program to enable text, image, and video advertisements on their websites. These advertisements are administered by Google and generate revenue on either a per-click or per-impression basis. In Q1 2010, Google earned US$2.04 billion ($8.16 billion annualized), or 30% of total revenue, through AdSense.
Google’s earns most of its revenue by allowing other website owners to advertise on their search result pages. All this is managed through a program they call AdWords.
Now individuals can earn a share of the revenue that Google earns from AdWords by displaying these same text ads on their site. In other words, they’re helping Google advertise and get paid a percentage of what Google earns. This program is called AdSense.
Every website owner should at least consider the program. Even if the site is just for information purposes, the owner can still participate and make decent money with AdSense — or at least enough to fund his website.
How AdSense works?
- Google’s servers use a cache of the page to determine a set of high-value keywords. If keywords have been cached already, advertisements are served for those keywords based on the AdWords bidding system.
- For site-targeted advertisements, the advertiser chooses the page(s) on which to display advertisements.
- Search advertisements are added to the list of results after the visitor performs a search.
How much can a site owner earn with AdSense?
A site owner will earn per ad that is clicked, the commission he receives per click depends on how much advertisers are paying Google for the particular ad. The site owner will earn a share of that amount. The earnings range from 2 cents to $15 per click, and he can login to his account at any time and see the total amount of revenue he has generated that day, week, month, year, etc.