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Adwords is Googles version of the pay-per-click advertising model. It allows you to display ads which link directly to your website when searches are done for your chosen keywords or keyphrases.
These ads are located to the right of the results which Google gives you for a search and they're also displayed on Googles many partner sites which include AOL, Earthlink, HowStuffWorks and blogger.
Recently with the launch of Googles Adsense program your ads could also be displayed on websites related to your keywords.

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