At the most basic level, AdSense puts advertisements on your Web site; AdWords puts your advertisements on the Web.  Together, they make up Google’s advertising programs.

AdSense

AdSense offers Web site owners the opportunity to make money by placing advertisements on their site. 

Once you join the AdSense program, Google reaches into its pool of ads (AdWords), and chooses those it considers most relevant to place on your site.  Although the choice of ads it serves depends on a variety of factors, relevance is crucial; Google want to make sure the ad that sits on your site fits in with what your site, and its visitors are all about.

If you are part of the AdSense program, Google uses the Mediabot instead of the Googlebot to crawl and analyze the contents of your Web pages, and offer relevant ads.  This type of advertising, where ads are chosen by an automated system and based on the contents of a page, is called contextual advertising.
 
The nice thing about AdSense is that it is not as intrusive (read ugly and jarring to the eye), as other forms of advertising such as banner ads or pop-ups/pop-unders.

You are paid on the number of clicks to an ad from your site; on a per-click basis.

AdWords

AdWords gives you the opportunity to advertise your product/service on the Web, either on Google’s search results pages, or on various Web sites that are part of the AdSense program.

Because the words a user types into Google’s search field are the trigger of related ads appearing on the results page, this type of advertising is also known as keyword advertising. 

On Google’s search results pages, ads are labeled “sponsored links” and appear above the organic results, as well as to the right of the organic results.  Where your ad is placed on this page is determined by Google.

On Web sites that are part of the AdSense program, your ads will appear in a space the Web site owner designates for Google ads, as well as in search results within that site if the site uses Google’s search tool.

Adwords, like AdSense is paid on a pay-per-click (PPC) basis, but the cost for this type of advertising varies, and is based on a measurement called the Google Quality Score.  The higher the Quality Score, the lower the price of the ad.

Amy Konefal, a fellow WebMama team member, and search consultant for Closed Loop Marketing, recently wrote about the problems facing conversion-based marketers when it comes to the factors Google considers when determining Quality Score:

There’s that pesky click-through rate which unfortunately is one of the most weighted elements in the equation.  Grrr…

You can read the full story, What’s the True Measure of “Quality” Anyway? at Google Blogoscoped.

For a basic rundown of the AdWords program, watch the five minute What is Google AdWords? video, or visit the Google AdWords Learning Center for free and easy lessons on all things AdWords.

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