Keywords are a key aspect in adwords. You pick keywords that you think apply to your ad. People will type in those keywords and they will have the option to click on your ad. Your keywords will correspond to the little text ad you have placed.
The advertiser will place keywords that they want to trigger their ad. They then tell Google how much they will be willing to bid to get someone to click on the ad. Once someone clicks on their ad, they will pay Google for that click. The google user will type in keywords and ads that have those words will pop up. If the ad is compelling they will click on it.
The higher the bid you place, the better the position you receive. The ideal spot is the right column on the first page of search results. Keywords will take sometime to getting used to. Fool around with your words so you can see which words do best.
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