Google and it's wonderful advertising programs: Adwords and adsense.

Next, just a few words about Google and its advertising system. Google have created something extremely clever with Adwords and Adsense. It is a 24 carat gold "Good Idea". It is doubtless making lots of money for Google, and it does not rely solely on stupid people. In case you don't already know, Adwords and Adsense works very simply. Advertisers pay for little text adverts. They pay Google. Google then employs many cunning computer algorithms to place topical adverts next to it's search result. If you search for "Carrot", you will most likely get an advert for a man selling carrots.

That's me being a bit allegorical by the way. They aren't many online carrot sellers. Anyhow, at the other end of the line is Adsense. Google pays website publishers a tiny amount of money for the display of aforementioned adwords ads on websites all around the Internet. Again, these are topically linked to the page content. This all happens "per click". So somebody visits a webpage, they read the content. They notice the adsense adverts on the page. They click on a link. The web users part is now finished. Depending on many factors (largely concerning the "value" of the keyword in the content that got the advert on the page) Google will charge the advertiser a few cents (or maybe as much as a few dollars for some keywords). Google will then pay the publisher on whose website the advert appeared a percentage of those few cents. And so the world goes around. What the advertiser gets is a visitor referred to their website. That visitor will then hopefully buy something from the advertiser.

Many money making methods on the Internet utilise the Google advertising programs. One very popular system was affiliate marketing. Essentially you became a Google advertiser and paid for some Google adwords ads. What are you advertising? Well, your advert has a link to a company (who you are affiliated with) - and if the visitor then goes on to buy something, you get commission. There are large websites dedicated to joining companies with things to sell to the affiliate marketers, and handling the financial side of the transaction. I am lead to believe that this can be tremendously lucrative. Well, it used to be. Unfortunately all the clever people have exploited this market to death, and, whilst it is still very active, it is difficult to gain a strong foothold because the margins involved are so slim. Basically, that area of making money is saturated.

The maths of this system speaks for itself. For a low cost keyword on Google, you might pay 5 cents per click. Of all the people who click on your advert, only a small percentage will actually buy something and earn you commission. Typically 1% or less. Usually less. So you might pay between $5 and $10 on adwords, and get one "sale". One sale might only earn you $10 in commission. It is very tight, and only the best win. Most end up paying lots of advertising costs to Google for little or no gain.

This happens quite quickly to all money making schemes that aren't illegal. So many people get involved so quickly that the system becomes super-saturated with many people trying to be clever people, the supply of stupid people with money ends up going only to the top percentage of the clever people who get it right.