It can be confusing for beginners to grasp the difference between Google Adwords and Google Adsense. They are in fact two separate programs, although they work in tandem with each other to deliver results for all parties involved.
Google Adwords is the program that allows advertisers to advertise their website by the use of ads. Those advertisements most often show up on Google‟s search results page (usually on the right hand column). They can also be displayed on Google‟s partner sites (like other search engines) or on publisher/webmaster‟s websites.
As an advertiser, you only pay Google for your ads that show up on their site and on their partner‟s sites. You do not pay for your ad to show up on other publishers‟ sites. In this instance, you would pay per click (PPC).
Google Adsense refers to the program wherein publishers sign up to run advertisers‟ ads on their website. The publishers are then paid by Google for each user they provide to those ads.
So, in summary, the advertiser PAYS Google to run their ad with Google Adwords. Google PAYS the publisher for results generated from Adsense ads.
The connection between the two programs is this: The ads that advertisers pay to run on Google Adwords are the SAME ads that publishers run on their websites. This is where the confusion comes in for most people. So, Google Adsense would not function without Google Adwords.
The publishers/webmasters are often referred to as Google‟s “content network”. When a publisher/webmaster signs up to run Google Adsense, they are matched up to your ad based on the content of their website.
Be aware that there are many places on the Web (like forums and blogs) that confuse readers by referring to Adwords and Adsense interchangeably. Remember that they are two separate programs, although they do work together to generate income for Google, the advertiser, and the publisher/webmaster.
If you are still finding it difficult to understand the difference, you can find more information on the two programs by going to Google‟s Adwords or Adsense website and reading their explanation. (However, many people find their explanation confusing, hence the making of this article.)