AdWords vs AdSense – What’s The Difference Between Them?

If you’re new to the world of pay per click marketing, then the terminology used can often be confusing. With so many industry terms, brand names, and rebrands, understanding what everything means can be complicated. A common problem in the pay per click industry is knowing the difference between Google AdWords and AdSense. And to make things even more confusing, they recently changed the name of their services. AdWords has been rebranded to Google Ads, but since they mean the same thing, we’ll use them interchangeably throughout this article.

Both services are created by the search engine giant Google, yet both are used by completely different people. To help you understand the major differences between the two services, we’re taking an in-depth look at how they work and who they are suitable for.

As someone new entering the pay per click industry, it’s essential to know the difference between the two services. In doing so, you can help improve your campaign results while also reducing your average cost per click.

So what exactly is the difference between AdWords vs AdSense and how should they be used to get the most out of your website?

To begin, let’s take a look at the most popular service out of the two, Google AdWords (now known as Google Ads).

What is Google AdWords?

google adwords logo

Launched on 23rd October in the year 2000, AdWords was one of Google’s first marketing services after releasing their revolutionary search engine. Today, Google AdWords brings in 78% of Google’s revenue, making it their most profitable department by far. Considering revenues from AdWords have grown year on year for the past decade, Google AdWords is only going to get bigger. If you have no idea what AdWords is or how it works, then pay attention! You’re missing out on one of the most powerful online marketing services there is.

The service itself is primarily aimed at advertisers who want to advertise on Google’s search engine or display network. Thanks to their low barriers to entry, almost any business can use AdWords to advertise their products and services.

With the ability to selectively target online users based on location, age, gender, and a whole range of other demographics, online advertising has never been easier. Not only does this make sure businesses are only targeting relevant consumers, but it can also save them lots of money. By using their budget to only target relevant consumers, businesses can easily improve their return on investment. After all, what’s the point in attracting visitors from mainland Europe if you only ship to customers in the UK?

Now before you run off and sign up for an AdWords account, it’s probably best to take a closer look at how Google AdWords works. Without a clear understanding of what goes on behind the scenes, you might have trouble understanding AdSense later on.

How Does Google AdWords Work?

To put it simply, AdWords works by helping advertisers match their products and services to consumers. This is primarily done by letting advertisers bid for keywords and ad space on Google’s search engine. In return, advertisers pay for every click their advert receives and Google pockets the cost as profit.

Since some industries can be very competitive, this means advertisers are constantly bidding against other advertisers for the right to display their advert on Google’s search engine. Depending on how much they bid and how competitive the keyword is, will determine which position their advert is displayed.

As of writing, there can be up to 7 advert spaces per keyword with 4 at the top of the results and the remaining 4 at the bottom. Obviously, everyone wants to be number 1 as that spot will receive the most views and therefore the most clicks. Unfortunately, not everyone can afford to outbid their competitors and sometimes it’s not economical to do so. However, having an ad in position 3 or 4 can still provide a steady amount of clicks for a much lower price.

When a user enters the keyword the advertiser has bid on; their advert will be displayed. For example, if a user searches for “men’s clothes” then ads that advertisers have set up for that keyword will appear. Depending on which AdWords keyword match type used will also determine what other keywords the ad is displayed on.

Every time the user clicks on an advert, they will be instantly redirected to the advertiser’s website. This means if your advert is showing within the first 4 ad spots then your website will be receiving lots of high-quality traffic. Compared to other methods such as SEO, this can be a fast way to get to the first page on Google.

By using Google’s AdWords service, many advertisers and businesses have had great success increasing their online marketing efforts and overall profit. Although there are plenty of other pay per click networks out there (like Bing Ads), AdWords is by far the biggest and most popular. This is mainly due to its ease of use and the fact that it’s been around for over 17 years.

What is AdSense?

google adsense logo

Now you have a good understanding of how AdWords can help businesses advertise online; it’s time to take a look at Google’s other service: AdSense.

Similar to Google AdWords, AdSense is very closely related and fits in the same pay per click category. Released 3 years after AdWords on 18th June 2003, AdSense is a clever service Google use to increase the size of their display network.

Advertising on Google’s search engine is great if you have lots of money and are in a popular industry. However, what about when prices become too expensive, or there isn’t enough monthly search volume?

In the old days before search engines were super popular, advertisers had to display ads on individual websites that were related to their industry. This meant contacting hundreds of websites and negotiating prices in order for them to display their ad.

In order to speed up the process and save everyone time, Google invented a service that allows webmasters to display Google ads on their sites. The webmaster simply installs a small piece of code on their website and Google will automatically display ads to their users.

Advertisers can then select if they want their ad to be displayed just on Google, or if they want to include 3rd party websites. This network dubbed “Google’s display network” is a great way for advertisers to reduce their advertising costs while also increasing exposure.

Take a look at the table below:

This shows the pricing difference between running an ad solely on Google’s search engine and including Google’s display network. As you can see, the price for running an ad on Google’s search engine is around £28.12 a click, while on the display network it’s slightly cheaper at £26.32. This is great news for advertisers as it allows them to advertise for a much lower cost.

This is also good news for website owners as it allows them to earn a percentage of the revenue every time a user clicks on one of their adverts.

How Does Google AdSense Work?

Understanding how Google AdSense works is essential for both website owners and advertisers. Here’s an example explaining how a webmaster can benefit from using AdSense:

Let’s assume that Michael owns a website related to pay per click management that gets over 10,000 visitors a month. Michael has a background in pay per click advertising and regularly posts tips and suggests to his readers on how to make their campaigns perform better. Michael’s website is doing pretty well and has a large following, however, Michael is not making any money from his site.

In order to monetize the traffic coming to his website, he decides to sign up for a free Google AdSense account. After registering his account and installing the code onto his website, dynamic ads that are related to pay per click will automatically begin to show.

adwords cost per click

As readers visit his website, some users might be interested in the ads he is displaying. Every time a user clicks one of the ads, Michael earns himself 68% of the cost per click. Since he’s in the pay per click industry, these keywords could cost anything up to tens of pounds per click. In the screenshot, you can see that the cost per click for “ppc management” was around £26.32! Now we’re not saying Michael will always get 68% of £26.32 as prices can regularly change. However, depending on his click-through rate, this is an easy way for Michael to earn an income from his website.

As for advertisers interested in using the Google display network they can also benefit from cheaper costs per click. By enabling the display network through their AdWords account, their ads will automatically be displayed on these 3rd party websites that have signed up to AdSense.

Google AdWords vs AdSense

Now you understand the differences between the two; it’s clear that both services are used by different parties.

To give you a quick summary of the two, all you need to remember is that:

Google AdWords is used by advertisers who are looking to advertise their products or services online to customers.

  • AdWords helps advertisers reach a large audience via search and display ads
  • Advertisers pay Google for every AdWords click they receive

Google AdSense is used by webmasters who are looking to monetize their traffic by displaying ads on their website.

  • AdSense allows 3rd party publishers to monetize their website by signing up for the AdSense program
  • Webmasters get a percentage of the AdWords average cost per click when they receive a click

Although it is possible to use both accounts at the same time, it is very rare. Most people are either looking to advertise their product or advertise other peoples, not both.

Advertisers Beware!

There’s no doubt that Google AdWords is one of the most powerful and popular online advertising systems out there today. With millions of advertisers signed up to the network, the competition for keywords can be fierce.

So fierce in fact that other advertisers resort to dirty tactics in order to get an advantage over their competitors. These dirty tactics include, but are not limited to, the dreaded click fraud. If you aren’t aware of this unethical AdWords practice then pay attention, this could be costing you a considerable amount of money every month.

Click fraud is the fraudulent clicking of AdWords ads when you have no intention of ever buying their product or service. By repeatedly clicking on competitors ads you can often cause them financial loss which affects their bottom line. In order to stop this from happening to you and your adverts, you need PPC Protect.

Developed by pay per click advertisers who have experienced the damage of click fraud first hand, PPC Protect works nonstop to eliminate click fraud. By using its vast database of blacklisted IP addresses, PPC Protect can stop fraudsters from ever seeing your ads. This means without being able to see them; they can’t click them. Not only does this save you money by blocking fraudulent clicks, but it also keeps you protected from future attacks.

Want to learn more about the dangers of click fraud and who’s responsible? Be sure to read our detailed guide on what is click fraud.

To see how much money PPC Protect can save you, sign up today for your free trial.