If you’re new to the online marketing world, you’ve likely been hearing the terms “AdSense” and “AdWords” in very similar contexts. It’s true that both work in a similar fashion, but they are actually quite different. As a small business owner, understanding this terminology is a must in order to take advantage of the online marketing options Google has to offer, but getting them confused is a common mistake. Fortunately, both concepts are easy to understand and you can get started using both AdWords and AdSense right away. Stop #1: Figure out what they mean and stop getting them mixed up.

How Google AdWords Works: Think Like an Advertiser

Google AdWords is a term for a campaign a small business might run to advertise on Google. As a business owner, you can open a free Google AdWords account and begin creating ads that you want to show up on a Google search engine results page (SERP). As you begin to setup your campaign, the Google AdWords system will help you choose relevant keywords so that you’re making the right decision about where your ads are going to be placed on that SERP. Google tries hard to make sure that your ads are placed in front of relevant users, or users who are searching for something similar to what you are offering. Below is a screenshot of where an ad you create in AdWords might appear:

adwords1 3 Ways to Understand Google AdSense vs. Google AdWords

 

Although setting up your Google AdWords account is free, actually creating and running a campaign is not. You set your own budget and can decide how much you want to pay based on either CPM (cost per thousand impressions) or PPC (pay per click). You can set a schedule to make sure that the ad only runs until you reach a certain success rate or run out of money on that particular campaign. It’s completely up to you to manage and track your results through this Google AdWords account/service. You can signup here.

How Google AdSense Works: Think Like a Website Owner

Google AdSense is a system that Google uses to distribute ads that are found in AdWords—this includes the ads you’ve created in AdWords as well as other ads not related to your company. In other words, people are creating new campaigns on AdWords everyday, and they want those shown to a relevant audience. Sometimes this means being put on a relevant website as opposed to a SERP.

An easy way to look at AdSense is to think about yourself as someone who owns a website (as opposed to someone who created a paid campaign, like you think about when discussing AdWords). As a publisher, you can earn money by displaying Google ads on your website. It’s free to use, and it works like this:

  • Sign up here and submit your website to Google AdSense.
  • Google will evaluate your site and approve you as a publisher.
  • They then give you a code you can use on your website to display relevant ads on your actual website.
  • You then decide where you want to put the code and subsequently show the ads on your particular site.

Google will then start to put relevant ads created in AdWords in the space that you choose. The advertisers will bid on having their ad shown on your website, and Google will display the highest bidder.

How Does Everyone Get Paid?

So as you can hopefully see, it is possible for you to be both an advertiser and a website owner (in fact most are), which means you may very well be using AdWords as well as AdSense. Being successful with both takes a lot of strategy, which you can learn more about here for AdWords, but getting involved is going to be a step in the right direction.

Another part of really understanding how it all works is first understanding where all the money comes from and why certain businesses make certain decisions:

Google

Google will make money because advertisers using AdWords have to pay for those ads to be distributed on Google and other websites (as discussed above, this could be through CPM or PPC).

Publishers Using AdSense

They earn a share of what Google makes from AdWords for the ads that are shown on their site. They will earn money by either simply just having the ad on their site and/or based on how many people clicked on that ad.

Advertisers using AdWords

These are the people that pay to have their ad shown across the web. Hopefully their ads will get good, relevant visibility, people will click, and then people will convert.

The Difference Between Google AdSense and Google AdWords in One Sentence

Google AdWords allows businesses to signup and create an ad to be displayed by Google on relevant SERPs and content pages, and Google AdSense lets publishers work with Google to get those ads placed on their pages for a cut of the profit.

Do you have any questions regarding AdWords versus AdSense? Have you found that using both together has helped your advertising? Let us know your story and your thoughts in the comments below.