You must have noticed that I have added AdSense to my blog recently. This is how adsense works. For every click made by a reader on the ads displayed, AdSense pays the person owning the blog a percentage of the amount that it gets from the partner companies.
AdSense reminds me of a website called "pointclick.com". I am not sure if you have heard about it. It was one of those dot-com companies that came up when the internet was booming around year 2000 and crashed immediately in the dot-com crash. The concept was quite simple. You just had to register yourself in the website and after that for every click on the ads displayed in the website users would get 1 cent. The balance would be accumulated and the user had an option of either taking cash or spending the money on partner sites. If spent on purchasing products from partner sites like amazon each click would be worth 2 cents.
The idea is very similar to AdSense. However AdSense is a lot more well thought out. Ads are displayed based on the content and are made relevant to the blog or website hosting AdSense. They also have a lot of parameters to measure the effectiveness of ads performance which include CTR - Click through rate, eCPM - Effective cost per mille. Apart from this adsense also keeps track of the IP address from which the click is made and detects possible fraud as in repeated clicks, patterns etc.
Pointclick was very naive and had none of these. While the starting was good and they had 200 business partners and a lot of users and clicks they were not able to sustain it because they did not have a proper execution plan to back themselves. They did not take into account the fact that people can only click on the links endlessly by opening multiple browser windows and just make money without spending anything on the partner sites. In the end the partners were not getting enough business out of it , users were making endless clicks and had increasing dues which pointclick could not pay and finally the company had to close down.
Here is a news article from September 1999, the time when pointclick.com was started
This articles quotes the president of the company as saying "Our goal is simple -- we want to help companies increase online sales. That is why we offer cash incentives to those who purchase products in the PointClick Network"
It is a similar idea which AdSense has used now and deployed successfully. It is not enough if you have a good idea. You need to back it up with a proper execution plan when you deploy it.