What is Google Adsense?

AdSense is an advertisement application run by Google. Website owners can enroll in this program to enable text, image, and more recently, video advertisements on their websites. These advertisements are administered by Google and generate revenue on either a per-click or per-impression basis. Google beta tested a cost-per-action service, but discontinued it in October 2008 in favor of a DoubleClick offering (also owned by Google).

How does it work?

The webmaster inserts the AdSense JavaScript code into a webpage. Each time this page is visited, the JavaScript code uses inlined to display content fetched from Google's servers. For contextual advertisement, 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, and pays based on cost per mille(CPM), or the price advertisers choose to pay for every thousand advertisements displayed. For referrals, Google adds money to the advertiser's account when visitors either download the referred software or subscribe to the referred service. The referral program was retired in August 2008. Search advertisement are added to the list of results after the visitor performs a search. Because the JavaScript is sent to the Web browser when the page is requested, it is possible for other website owners to copy the JavaScript code into their own web pages. To protect against this type of fraud, AdSense customers can specify the pages on which advertisements should be shown. AdSense then ignores clicks from pages other than those specified.

How to get maximum exposure?

You can get maximum exposure to your Adsense units to increase revenue by following a few steps. Place the ads in places that people will go to, possible near your site's menu bar. Also, setting your Adsense unit's background to a bright, attractive color, but have it match your site's color palette. Placing your ad unit near the top, using large ads will definately attract attention, and incorperating small rectangle ads in your site between your site's content has also been proven to work.

Critisism

Due to concerns about click fraud, 'Google AdSense' has been criticized by some search engine optimization firms as a large source of what Google calls "invalid clicks", in which one company clicks on a rival's search engine advertisements to drive up the other company's costs.
To help prevent click fraud, AdSense publishers can choose from a number of click-tracking programs. These programs display detailed information about the visitors who click on the AdSense advertisements. Publishers can use this to determine whether or not they have been a victim of click fraud. There are a number of commercial tracking scripts available for purchase.
The payment terms for webmasters have also been criticized.

Google withholds payment until an account reaches US$100, but many micro content providers require a long time—years in some cases—to build up this much AdSense revenue. However, Google will pay all earned revenue greater than US$10 when an AdSense account is closed.
Many website owners complain that their AdSense accounts have been disabled just before they were supposed to receive their first paycheck from Google. Google claims accounts have been disabled due to click fraud.
Google came under fire when the official Google AdSense Blog showcased the French video website Imineo.com. This website violated Google's AdSense Program Policies by displaying AdSense alongside sexually explicit material. Typically, websites displaying AdSense have been banned from showing such content. Some sites have been banned for distributing copyright material even when they hold the copyright themselves or are authorized by the copyright holder to distribute the material.
It has been reported that using both AdSense and AdWords may cause a website to pay Google a commission when the website advertises itself.