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So my question is can advertisers still target a site and increase the CPC they are willing to pay for exposure on that site?
And how do I encourage advertisers to target my site? -> I need an easy-to-follow instructions/tutorial which I could send potential advertisers with straightforward directions to set up site-targeting for my site?
To do this, they have to select a placement option rather then a keyword option when setting up the campaign within AdWords.
In the placement option, they are asked for the URL of the site they want to advertise under. They would put your URL in that spot.
Here is more information from Google on site placements: