I was having dinner with a friend of mine the other night and she asked me about the excavator I recommend on this blog. I told her that I haven't recommended one. She insisted that she'd seen his name here. I told her I would check my list of recommendations, but I couldn't think of anyone who specializes in excavation. The next day, I looked at my Links section, which is where I list people and services that I recommend. Sure enough, no excavator.
But this still bothered me. My friend is smart, sharp and she reads my blog regularly. Why was she so sure she had seen an excavator listed here? Then it struck me! She probably saw the excavator listed in one of the Google ads running on my page.
The reason I bring this up, is because conversations like this one show me that we bloggers haven't done a very good job of explaining the ways we are compensated for our work. As a result, our readers make assumptions based on past experience with traditional advertising. They may think, as my friend probably did, that if a company's name appears on my pages, it means that I know who they are. Which isn't necessarily true in the case of Google ads, as I will explain.
I would venture to say that most of the ads you see on blogs are based on business models that are unique to the internet. (For an explanation of how affiliate marketing works, for example, take a look at the Support This Blog section or read this post.) If you read blogs, you are part of these business models, whether you understand them or not. So it is only fair for you to know how they work.
Google ads are different from affiliate marketing and typical, pay-for-space advertising. You can identify a Google ad in a couple of ways: by looking for the little sideways triangle in the upper right hand corner that says AdChoices when you mouse over it or looking at the lower right corner for a small caption that says either AdChoices or Ads by Google.
Google doesn't pay bloggers for ad space. We do get a very small sum for impressions - a penny or two (literally) for every 100 or so page views. But most of the revenue comes from readers clicking on ads.
Google doesn't give bloggers a choice of which companies will appear in their ads. (Which is how the excavator showed up here without my knowing.) We can filter out certain categories of ads, like politics, religion, drugs, etc. We can block specific URLs, which allows a company to avoid having their direct competitors' ads show up on their pages. Beyond that, Google serves up whatever ads they believe make sense based on a blog's content and a reader's search history.
Ads are also "localized." When I visit a blog, I see ads for Seattle businesses because that's where I live. Readers in New York see ads for businesses based in New York. This is true internationally, too. I have had readers as far away as the UK, Thailand, and Ukraine click on ads they found on one of my blogs. Google Translate makes it possible for readers to access content and advertising in their languages, suited to their locations.
How much do we get paid when a reader clicks on an ad? Well, it's complicated. Here's a video from Google's chief economist that explains.
I hope this helps to clear up some of the mystery around Google ads and how they work. I don't pretend to understand the process completely, but at least now you know as much as I do.