| "Say I write an article about a Braun shaver," says Chris Pirillo, who runs the Lockergnome.com gadget Web site. "I publish it, and within minutes, I have targeted ads about shavers on my site. Someone who reads the content may feel compelled to pick one up. That helps me and the reader." Tales of AdSense riches range from a few hundred dollars a month to $50,000 or more a year, though high-dollar paydays are rare. They require a Web site with tons of traffic and the ability to put in 18-hour days working the system. Pirillo, who has a following from his former role as a host on the now-defunct TechTV cable channel, says he's clearing more than $10,000 a month. Before AdSense, which began in March 2003, bloggers and other small Web publishers had fewer options to make money. They could put banner ads on their sites for a host of non-related products, or commission programs from Amazon and eBay. "It was a lot more work, and you didn't get much of a return," Pirillo says. With AdSense, "You write content, publish it, and the money starts to pour in," he says. When he published the now-defunct Silicon Alley Reporter magazine, Jason Calacanis says, he used to suffer from insomnia, worrying about his monthly $200,000 to $400,000 printing bill. He now runs a company called Weblogs, which publishes 75 Web sites on such topics as cars, gadgets, digital music and video games. He sleeps much better, he says, because "with AdSense, you know you're always making money. Your life gets a lot easier." In his first four months of Web publishing, AdSense brought in $45,000. Some of his blogs produce $3,000 a month. His best do "four figures," Calacanis says, though he's reluctant to fill in the exact numbers. "And that's with zero marketing," he says. How it works Google and Yahoo dominate the booming online search advertising business, which is expected to grow to $5.6 billion in 2008, from $2.7 billion in 2004. Profit from search advertising enabled Google to more than double its revenue in 2004, to $3.1 billion. The concept — text ads that appear next to search results — works on a "pay-per-click" model. Advertisers pay only if someone clicks on an ad. To use the programs, advertisers buy "keywords" for anywhere from 5 cents to $100 a word. Those are the terms people type into query boxes when they're searching, such as "Atlanta wedding photographer" or "Omaha Italian restaurants." AdSense works as a part of that keyword model; it's an offshoot of what Google calls its AdWords program, which competes against Yahoo's Overture unit. AdSense is a bonus program for advertisers who use Google AdWords. Through AdSense, Google clients get to tout their wares beyond Google's home page — potentially reaching more than 200,000 participating Web sites. Small Web site operators have flocked to AdSense as a way to attract advertising. To participate, they sign up at Google, which reviews the site. Once a small piece of computer code language is implanted on an accepted site, Google does the rest — matching ad links from its warehouse of clients to appropriate sites. There's an art to optimizing a site to attract more links — and generate more revenue. Gay Gilmore, who runs Seattle-based recipezaar.com, says the trick is to attract ads next to recipes beyond the main page. "The ads need to be targeted," she says, "so that when someone is reading about chicken soup, an ad for one of the ingredients is of keen interest." Web site publishers need to be creative, says Dave Lavinsky of TopPayingKeywords.com, an AdSense advice site. A house painter advertising his services on a homemade site is leaving money on the table if he mentions only house painting, he says. "'Housepainting' is a 20-cent word. 'Home improvement' is worth $2, so you should create content for that." But Sullivan says keyword tricks hurt the editorial integrity of sites. Another problem, he says, is the proliferation of computer-generated directories with links to hotels, restaurants and entertainment and no real editorial content, fueled by the availability of "Ads by Google" checks. Wojcicki says Google tries to review all sites in its program, and removes offenders such as the directory sites. Critics say the site reviews can sometimes result in an FCC-like "family friendly" filter. Bloggers complain about being rejected for discussions of sexuality and use of four-letter words. "I begged, argued and appealed to reason for months," says author Susie Bright, whose site discusses sexuality issues. "I pointed out that all my postings were things you could easily read in ... any number of mainstream magazines that cover sex and politics from a fairly sophisticated point of view. And I pointed out that my readers like to buy trousers, go on vacations, purchase ink and basically buy all the same things that everyone else does." Wojcicki wouldn't address the specifics of Bright's concerns, but says AdSense isn't for everyone. "We're very careful about who we let into our network. We reject sites with content some people may feel uncomfortable about." With pay-per-click ads, Google and Yahoo are locked in a bitter battle for advertiser dollars. But Yahoo doesn't compete with AdSense for small publishers — yet. Yahoo says it will introduce an offering later this year. For now, Google's most notable AdSense competitor is privately held Kanoodle, which accepted Bright's site. It works with small publishers and big ones (including USATODAY.com and MSNBC) and differs from AdSense in that advertisers can choose topic areas of the sites where they want their ads to appear. "The search advertising market is red hot right now, and publishers and advertisers want more," says Kanoodle CEO Lance Podell. "We offer them more places to show their ads, and they love that." How long will search sizzle? Google's initial public stock offering last summer was a Wall Street sensation. The stock opened at $85 a share and now sells for around $180, down from its 52-week high of $216. Some analysts fret that the red-hot paid search market could start to cool down. Forrester Research, revising downward earlier projections, expects 30% growth in search advertising revenue this year, after a 45% jump in 2004. "Click fraud" is another nettlesome issue for Google and Yahoo. Advertisers pay for ads only when they're clicked, but it doesn't always work that way. Some competitors click ads just to run up the other guy's bills. Web publishers with AdSense get their friends to click ads so they can get more money. Some savvy webmasters have set up automated clicking models called "Hitbots" or "Clickbots," which click away all day, and cost the advertiser. Such efforts "threaten our business model," Google CFO George Reyes said at a recent industry conference. "Something has to be done about this, really, really quickly." University of California professor John Battelle, who is writing a book on search, says the success of AdSense has built a "growing, extremely sophisticated offshore industry." "There are more of these sites than you can imagine," he says. "The robots click on the ads and then none of the clicks turn into leads for the advertisers. That's not how it's supposed to work." Google and Yahoo say they are working on the problem, but Battelle doesn't think that's enough. Yahoo, Microsoft and America Online have banded together on several occasions to fight e-mail spam, and Battelle says Google and Yahoo should show the same kind of joint leadership. "Because if they don't, it will end up biting them in the butt." | 
Advertisers buy search keywords.
