Placement targeting basically allows AdWords advertisers to choose specific ad placements where they'd like their ads to appear.
Ad placement can be an entire website or a specific sub-set of ad units within that site. For example only ad units on sports pages or all ad units at the top of the page.
Advertisers find ad placements in many ways. Sometimes by listing websites where they'd like to advertise, sometimes by searching for placements that match the themes and topics they'd like to target.
You can also choose your own ad placements using specific sub-sets of ad units on your blog or site.
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