Have you ever done a search on Google.com? Your answer is probably "yes," as Google boasts more than 200 million searches each day. You may have noticed that when you do a search on Google, when your results appear there is often a section on the right side of the screen in a section labeled "Sponsored Links." If you do a Google search on "magazine subscriptions" right now you can see an example of this. "Magazine subscriptions" is a very popular search term, so there are always plenty of sponsored links. If you click on one of the headlines, you are taking to another page; in this case, a magazine subscription sales page. Did you notice that the subject of all the ads matched your search term? This is because the ads are set up to be triggered by certain keywords. If you do a search for "magazine subscriptions," you would not see an ad for dog food.
These ads on the search results page are called "Adwords." Did you know anyone can write them, even you? You can even write these ads if you do not have anything to sell, by simply writing ads promoting other people's products. Why would you want to promote someone else's products? Because there are hundreds of thousands of products and services for sale on the internet that offer generous commissions for referred links. What does this mean? Here is a simple example: Let's say you find a company that sells violins online. You discover that they have a program that offers a commission of 8% on referred sales. You write ad for a specific violin model, and bid 5 cents on keywords such as "buy violins online," "purchase violins" or the specific model number of the violin in your ad. When someone does a search on "purchase violins," your ad will be displayed. You are only charged if that web surfer click on your ad. In this case, you would be charged the 5 cents you bid for that keyword. Now, let's say that 100 people click on your ad, and one person purchases a violin costing $400. You have spent $5 on advertising, but have earned a $32 commission for a profit of $27. $27 might not be much, but if you have dozens of ads triggered by thousands of keywords, your profits can quickly ad up.
The trick of the Adwords game, of course, is to make your commissions always outweigh you advertising costs. You do this making sure of the following three things: you don't bid too much for keywords, you write your ads well, and you chose good products that sell well and offer good commissions. If you jump into Adwords without caution, you will quickly give in to the temptation to spend to much for your advertising, and will be spending much more than you make.
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