Text ads come from Google AdWords, which is Google's advertising program. Advertisers bid in a silent auction to advertise for each keyword.
AdSense also supplies image and video ads through AdWords.
Google restricts AdSense to pornographic Web sites. In addition, you may not use ads that may be confused with Google ads on the same page.
If you use AdSense ads on search results, the search results must use the Google search engine.
You may not click on your own ads or encourage others to click on your ads with phrases like "Click on my ads." You must also avoid mechanical or other methods of artificially inflating your page views or clicks. This is considered to be click fraud.
Google also restricts you from disclosing AdSense details, such as how much you were paid for a keyword.
See Also: How to Improve Your Website's Google Ranking
How to Apply:
You must apply, and Google must approve your site, before you may earn money from AdSense.
You can fill out an AdSense application directly at www.google.com/adsense
You can also apply from within your Blogger blog.
The application process may take several days before approval.
It is free to place AdSense ads.
AdSense is divided into two basic locations.
AdSense for Content
AdSense for Search
AdSense for Content covers ads placed in blogs and Web sites. You can also place ads in the RSS or Atom feed from your blog.
AdSense for Search covers ads placed within search engine results. Companies, such as Blingo can create a custom search engine using Google search results.
Google offers three payment methods.
CPC, or cost per click ads pay every time someone clicks on an ad.
CPM, or cost per thousand impressions ads pay for every thousand times a page is viewed.
Cost per action, or referral ads are software ads that pay for every time someone follows a link and takes the advertised action, such as downloading software.
Google for Search results only use CPC ads.
Payments are generally monthly by either check or electronic funds transfer. US residents must supply tax information to Google, and the income you receive will be reported to the IRS.
Google AdSense ads can potentially pay well. There are people who earn in excess of $100,000 per year in AdSense revenue alone. However, to earn money from AdSense, you really need to attract a large audience. This takes time, quality content, search engine optimization, and possibly advertising. It's possible for a new AdSense user to spend more money on advertising and server fees than they earn in revenue.
It's also possible to make content with keywords that nobody has purchased through AdWords. When this happens, you will only see Google public service ads, and those do not generate income.
AdSense ads are very unobtrusive, so it provides a better user experience than flashy banner ads. Because the ads are contextual, many people will want to click on them anyway, since the results may be relevant.
You don't have to be big or famous to start using AdSense, and the application process is simple. You can even insert ads in your Blogger blog, so you don't need to host your own Web site.
AdSense acts like your own ad broker. You don't have to negotiate prices or find appropriate advertisers. Google does that for you, so you can concentrate on creating quality content and publicizing your Web site.
By Marziah Karch, Google Expert