Google earned more than $29 billion in 2010.
Google Inc. is the owner of the world's most popular Internet search engine. The company earns much of its revenue through paid advertisements displayed on search engine results pages and on the websites of small and large independent publishers. Google calls this system AdSense. Ads from AdSense are targeted, which means that the ads you see on the web are the ones that the AdSense system has selected for you. Google's goal is to display advertisements that are likely to interest you, and it determines this using multiple factors.
Search Keywords
When you search for information on Google, you may have noticed a pink box with the word "Ad" at the top of the results page. The advertisement is selected based on your search keywords. Any business can create an AdSense advertisement through Google's AdWords program. Using AdWords, business owners input the search keywords for which they want their advertisements to appear. Many advertisers compete for the most popular keywords and bid against one another hoping that their advertisement will appear most prominently.
Previous Websites
When you visit a website that displays AdSense advertisements, Google saves a tracking cookie on your computer. This cookie contains an alphanumerical string that serves as a unique ID for your computer. Using this cookie, Google is able to track each AdSense publisher that you visit and build a profile of your interests. The profile does not identify you personally; it only tracks the online activities that take place on your computer. If you visit many websites about cars, for example, you may find car-related advertisements on a website with unrelated content.
Website Content
When Google crawls a website and caches the content for its search engine, it records the keyword density of that website to determine the content. Google uses this information to provide relevant search engine results. If that website displays AdSense advertisements, Google also uses the keyword content of the website to match it with relevant, targeted ads.
Privacy
When Google collects information for targeted advertisements, it links that information to your computer, not to you personally. Google requires all publishers that display AdSense advertisements to post a privacy policy explaining how Google's tracking cookies work. If you do not want Google to track your history of searches and visited websites, opt out of this tracking through Google's Advertising and Privacy page.
