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I have a search function on my site and I am looking to supplement my search results with paid search results for the exact term that the user used in his/her search. In other words, if someone searches my site for "blue widgets", I want to display content/search ads for "blue widgets" from Google or Yahoo. I see other legitimate sites (and also arbitrage sites) doing this with what looks to be Yahoo search result ads, but I cannot find out how to do this. Any help is appreciated.
The smaller ppc engines don't seam to have any issues with this, but generaly the cpc will be a lot lower because Google and Yahoo have taken so much of the online ad market.
It's against Adsense TOS to place any other contextually targeted ads and paid ads from another source would land you in hot water.
The added bonus is that AdSense for search is now uses our Custom Search Engine technology, so you can set up your site's search box to search across your site or a list of sites that you select. For example, if you run a recipe site you can show targeted ads next to search results from your site as well as other food blogs that may be of interest to your users.
Here [google.com] are the FAQs on AdSense for search if you're interested.
We can't use Custom Search, as it doesn't serve our purpose.