From: Profit Lance 's Insiders Guide to AdWords
When a user enters a search query on Google.com, Google displays
webpages and ads that most relate to the word or phrase entered.
With webpages, Google scans keywords on each webpage in its index
to see if that page matches the user’s query. With ads, however, you
get to pick the keywords that relate to your website. When a user
searches for keywords you’ve selected, your ads have the opportunity
to appear next to the search results.
Ads that best match the user’s search query typically garner more
clicks. The more relevant the ad is to the user’s query, the higher the
ad will appear on a results page. Some other calculations are associated
with this process, but we’ll leave that discussion for later.
Ads on Google search results pages are available on a cost-per-click
(CPC) basis. This means that you’re charged only when somebody
clicks on your ad and visits your website. Google also offers pricing
on a cost-per-1000 impressions (CPM) basis for site-targeted campaigns.
Learn more about other pricing options here:
http://www.google.com/adwords/pricing.
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