Yeah, I guess I'm in a geeky training mode today. It is my job after all.
I will warn you - this entry is going to be boring, but highly informative. Honest.
AdWords - In a nutshell, AdWords is Google's advertising platform. It allows users to post ads (1) on Google Search in the Sponsored Results section, (2) on Google's various search partners like Ask.com or (3) on Google's Content network which includes thousands of websites and blogs including the New York Times.
It's really simple to use - the main way is to think of keywords your customers might use to find your website. They can be terms related to your services or perhaps even actual brands and product names that you sell. When customers search for these key words, ads are displayed beside the search results - these are the ads sold via AdWords.
There's a complex automated bidding system involved where based on how much you're offering to pay for a click on your ad (thus sending someone to your website), the quality of your ad and how much everyone else is bidding. You can control how much you're willing to spend on an ad and how much in total you're willing to spend per day. Thus you can totally control how much or how little you'll spend, which will ultimately have a direct relationship to how often your ad is displayed and how often it is clicked. Remember, you only pay for clicks and now for the hundreds or thousands of times your ad may display.
Who Needs AdWords? - People with business who want to try online advertising or are very interested increasing their internet traffic and are willing to pay for it.
AdSense - AdSense is the system that allows website owners to display Google Ads (yes, those sold through AdWords) on their websites for free. By displaying Google Ads on their website, they have the potential of earning money every time someone clicks on those ads (thus fulfilling the goal of the AdWords advertiser who paid for that click). These ads are related to the articles or websites they're displayed on since the system looks for keywords in nearby text in order to determine which ads are most likely to be relevant. Thus you don't get garish ads that are totally unrelated to your content.
Don't even think about trying to click your own ads in the hopes of making money - Google has entire development teams dedicated to studying human behavior on the internet in order to figure out which clicks are valid and which ones are invalid clicks done to increase AdSense revenue or to force an AdWords advertiser to spend more.
It's really easy to setup as long as you have code-level control over your website. For example, if you run your own Blogger-hosted blog, this provides options to insert the code to display the ads. If you just have a blog hosted on a site like Friendster or Facebook, you don't have the ability to end the code and thus you can't post AdSense ad modules.
Who Needs AdSense? - Website owners (including bloggers) or anyone who has content on the internet along with code-level controls for his or her website / blog who want to make money without having to go directly marketing ad spaces on their websites. You won't make a lot of money unless you get a sizable amount of site traffic and your users actually click on your ads, so don't think of this as a get rich quick scheme.
Analytics Google Analytics is a back-end product that allows a website owner or blogger to gather more information on the behavior of users on their website. This includes a lot of data ranging from just how many times your page was viewed in a given time period all the way to the internet speed, browser and operating system of your readers.
Analytics is free to use and all it takes is a piece of code inserted into the source code of the website in question. Once installed, it starts to track data and you just need to visit your Analytics account to get a variety of ready-made reports, charts and data tables or you can customize and create your own dashboards and reports.
Analytics has connections to both AdWords and AdSense. If you have either product and choose to link your Analytics account to them, you can get additional information related to that product. AdWords users with Analytics installed can track how effective their ad campaign is and how many users visit your site because of your ads and what they are actually doing once they land. AdSense users can track how many users clicked on their ads and gather related data on them in terms of their behavior on the site to some extent.
Who Needs Analytics? - Website owners and bloggers who have access to their site's source code who want to gather more information on their visitors. Think of this as a highly complicated hit counter, as was popular in the day, but it gathers a whole lot more information and is very simple to install. Thus it provides information that even a business could use all for free.
I hope this helps folks differentiate one from the other and know their value. If you want to know more information, post your questions in the comments and I just might get around to answering your question in the form of a standalone entry.
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