Google Advertising Tools, 2nd Edition

Chapter 6. Making Money by Hosting Advertising

If you think about how you live your life, there’s a spectrum of activity levels from sleeping to moving briskly and perhaps even running. Advertising on the Web is structured with a similar activity-level spectrum, although the activities themselves may not be very aerobic.

At the briskest, a visitor to your site must click on a merchant’s link. You only get paid when the visitor actually buys something from the merchant. This is affiliate advertising, explained in Chapter 5.

CPC—cost per click—advertising is one of the most common ways to make money by accepting ads on your site. With CPC, an advertiser pays a fee when someone clicks its link on your site, and you get a portion of that fee. CPC ads are mostly (although they don’t have to be) text-only. While CPC is most commonly associated with advertising using programs such as AdWords, the concept of CPC is fundamental to both search-based AdWords and content hosted via programs such as Google AdSense.

The idea of making ads contextual—that is, relevant to the content of the web page near the ad—is closely bound with CPC advertising. CPC ads that are contextual are much more effective, and generate more revenue for a site owner, than ads that are not contextual. But it is worth bearing in mind that you can have CPC ads that are not contextual, and conversely, contextual ads that pay on some other basis than CPC.

Like affiliate advertising, something has to happen with ...