Google grabs the cash from the AdWords' member's account, keeps some of it for themselves, and gives the other portion to the advertiser.

People see those little 'Ads by Google' titbits and they mouse click like crazy. Or at least that's the idea. But have you ever thought about where those web ads are coming from? Well, have you ever heard of AdWords, the Pay-Per-Click program for people who want to advertise their products on Google?

It provides pay-per-click advertisement to merchants who shell out anywhere from a minimum 05-.05 per mouse click all the way up to a maximum of $100 per click.

Anyway, the advertiser joins the AdWords program and gets a control board similar to the one that we AdSense users get. They can write their ads, choose their keywords, and establish an advertising budget. They get tools to track performance as well as to help them choose keywords. There are no every month minimum spends required and they can turn their ads on and off at will.

If an advertiser is pleased with their ad, it gets discharged to the WWW and shows up on web sites like yours and mine. That's if the keywords on your website match the keywords that are required for the new ad, of course.

Personally, I'm not sure that I have the grit to put in a great deal of money into hoping that people who mouse click on my advertisement will actually buy something, since I still have to pay Google whether I make a sale or not. But, as a dedicated AdSense user, I'm sure glad that my AdWords brothers and sisters have more heart than I do.

Google doesn't merely push the people with the best paying ads to the top of the SERP (Search Engine Results Page). They use a original methodological analysis that takes into consideration not only the maximum CPC (cost per click), but also includes a hidden formula for determining an ad's arrangement founded upon the number of clicks the advertisement receives. So, at least in theory, an advertisement paying .05 per mouse click could raise above one paying $5.00 per mouse click if it's more popular with Google's audience.

I say 'in theory' because if the proprietor of the $5 advertisement is paying attention then he or she will see that they are being beaten by a lower paying advertisement, they'll most likely do some serious rewriting to get back up to the top where they belong.