Paid Search describes the technology and service that places advertisements on websites. Ad serving technology companies provide software to web sites and advertisers to serve ads, count them, choose the ads that will make the website or advertiser most money, and monitor progress of different advertising campaigns.

AdWords is Google's flagship advertising product, and main source of revenue. AdWords offers pay-per-click (PPC) advertising, and site-targeted advertising for both text and banner ads. The AdWords program includes local, national, and international distribution. Google's text advertisements are short, consisting of one title line and two content text lines. Image ads can be one of several different Interactive Advertising Bureau (IAB) standard sizes.

Yahoo! Search Marketing is a keyword-based Pay Per Click" or "Sponsored Search" Internet advertising service provided by Yahoo!.
Yahoo began offering this service after acquiring Overture Services, Inc. (formerly Goto.com). Goto.com was an Idealab spin off and was the first company to successfully provide a pay-for-placement search service following previous attempts that were not well received

Microsoft adCenter allows advertisers to target their ads by restricting their ads to a given set of demographics and by increasing their bids whenever the ad is seen by a user of a certain demographic. As of November 2006, no other PPC advertising system has a similar feature. Similarly, adCenter allows advertisers to run their ads on specific days of the week or certain times of day. Microsoft adCenter provides both UI and Web service API front end to advertisers, both are built on Microsoft .Net 2.0 framework.
Pay-Per-Click advertisements (PPC)

Advertisers specify the words that should trigger their ads and the maximum amount they are willing to pay per click. When a user searches Google's search engine on www.google.com, ads for relevant words are shown as "sponsored link" on the right side of the screen, and sometimes above the main search results.

The ordering of the paid listings depends on other advertisers' bids (pay for placement P4P) and the "quality score" of all ads shown for a given search. The quality score is calculated by historical click-through rates and the relevance of an advertiser's ad text, keyword, and landing page to the search, as determined by Google. The quality score is also used by Google to set the minimum bids for an advertiser's keywords.

The auction mechanism that determines the order of the ads has been called a "generalized second price" auction. It is a variation of the Vickrey auction.

Site targeted advertisements

In 2003 Google introduced site-targeted advertising. Using the AdWords control panel, advertisers can enter keywords of interest, and Google offers to place ads on what they claim are relevant sites within their content network. Advertisers then bid on a cost per mille (CPM) basis for placement. However, Google does not provide advertisers with a list of sites where their ads have been placed, and there is evidence that many of the "content network" sites are merely ad pages set up on parked domains. Advertisers can provide a list of sites where they do not wish their ads to appear, but cannot obtain a list of sites where their ads could or do appear.

AdWords distribution

All AdWords ads are eligible to be shown on www.google.com. Advertisers also have the option of enabling their ads to show on Google's partner networks. The "search network" includes AOL search, Ask.com, and Netscape. Like www.google.com, these search engines show AdWords ads in response to user searches.

The "content network" shows AdWords ads on sites that are not search engines. These content network sites are those that use AdSense, the other side of the Google advertising model. AdSense is used by publishers who wish to bring traffic to their websites. Click through rates on the content network are typically much lower than those on the search network and are therefore ignored when calculating an advertiser's quality score.

Google automatically determines the subject of pages and displays relevant ads based on the advertisers' keyword lists. AdSense publishers may select channels to help direct Google's ad placements on their pages, to better track performance of their ad units. There are many different types of ads you can run across Google's network, including text ads, image ads (banner ads), local business ads, mobile text ads, and in-page video ads.

Google AdWords' main competitors are Yahoo! Search Marketing and Microsoft adCenter.