Google were the first to implement text ads. Up until then all advertising on websites were banner ads. The advantage of text was that it didn't appear to be advertising. The average web surfer had subconsciously built a blindspot for graphical banner ads.

Each time a visitor visits a page with an AdSense tag, a piece of JavaScript writes an iframe tag, whose src attribute includes the URL of the page. Google's servers use a cache of the page for the URL or the keywords in the URL itself to determine a set of high-value keywords. If keywords have been cached already, ads are served for those keywords based on the AdWords bidding system.

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Contextual advertising is the term applied to advertisements appearing on websites where the advertisements are selected and served by automated systems based on the content displayed on the page.

Google AdSense was the first major contextual advertising program. It worked by providing webmasters with JavaScript code that, when inserted into web pages, called up relevant advertisements from the Google inventory of advertisers. The relevance was calculated by a separate Google bot that indexed the content of the page.

Contextual advertising has made a major impact on earnings of many websites. As the ads are more targeted they are more likely to get clicked, thus generating revenue for the owner of the website. A large part of Google's earnings are from their share of the contextual ads served on the millions of webpages running the Adsense program.

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Pay per click (PPC) is an advertising technique used on websites, advertising networks, and search engines.

Advertisers bid on "keywords" that they believe their target market (people they think would be interested in their offer) would type in the search bar or present on a webpage.

They pay for each click generated on the webpage.

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In addition to PPC Adsense also has eCPM (Effective Cost Per Mille).

Effective Cost Per Mille or eCPM (as it is often initialized to) means the cost of every 1,000 ad impressions shown.

CPM is considered the optimal form of selling online advertising from the publisher's point of view. A publisher gets paid every time an ad is shown.

Advertisers who choose to specifically sign up to the

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The underlying technology behind AdSense was derived originally from WordNet and Simpli, a company started by the founder of Wordnet - George A. Miller - and a number of professors and graduate students from Brown University

A variation of this technology utilizing Wordnet was developed by Oingo, a small search engine company based in Santa Monica founded in 1998. Oingo focused on semantic searches rather than brute force string searches.
Oingo changed its name to Applied Semantics, which was then bought by Google for $102 million in April 2003, to replace a similar system being developed in house.

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You can filter up to 200 URLs, so you can block ads for sites that don't meet your standards. You can also block strong competitors.

One problem is inappropriate ads. You don't want spammy junk advertised on your site. Google's standards probably aren't as high as yours. You can filter out 200 URLs, but in some industries that won't be enough.

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When it comes to blending there is only so much you can do with the AdSense ad unit itself. This means that you have to somewhat change the appearance of your page to match that of the Google AdSense ad, if you want successful blending.

This can entail anything from changing the formating of the text, alignment, etc...

The most basic and certainly the one that will see an immediate result is making the background color and the border color of your ad the same color of your webpages background.

This blends the textual content of the ad in with the content of your site. And the fact that it is within the same context (theme, topic) of your webpage visitors will be more inclined to click on the ad with the belief that they will get more of the same quality in information.

Implementing such changes can increase CTR (the Click Thru Rate of your visitors) and also helps the site look a little nicer as everything fits in place.

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Click fraud is a type of internet crime that occurs in pay per click online advertising when a person, automated script, or computer program imitates a legitimate user of a web browser clicking on an ad, for the purpose of generating a charge per click without having actual interest in the target of the ad's link. Click fraud is the subject of some controversy and increasing litigation due to the advertising networks being a key beneficiary of the fraud.

Use of a computer to commit this type of Internet fraud is a felony in many jurisdictions, for example as covered by Penal code 502 in California, USA, and the Computer Misuse Act 1990 in the United Kingdom. There have been arrests relating to click fraud with regard to malicious clicking in order to deplete a competitor's advertising budget

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Google prohibits people from using phrases like "Click on my AdSense ads" to increase click rates. Phrases accepted are "Sponsored Links" and "Advertisements".

Clicking the ads yourself is click fraud. Asking friends or family members to click on ads is also click fraud.

You might wonder how Google will ever find out. But they can. And they will. And they'll ban you for life. Read this lens on Click Fraud for information on all the different types of click fraud and all the different ways they can catch you out.

All of this information also applies to how Adsense works with Squidoo. The only difference being is you don't need to open your own Adsense account. Squidoo uses their own, and they split the revenue with the co-op of Lensmasters. For more information on this read this lens on Payrank.