Summary
AdSense is one of many ways to earn money from the Web. 
AdSense for content is a system of Google contextual ads
 that you can place on your blog, search engine, or Web site. Google, in
 return, will give you a portion of the revenue generated from these 
ads. The rate you are paid varies, depending on the keywords on your Web
 site used to generate the ads.
Text ads come from Google AdWords, which is Google's advertising program.
Advertisers bid in a silent auction to 
advertise for each keyword, and then content providers get paid for the 
ads they place in their content. Neither advertisers nor content 
providers are in complete control over which ads go where. That's one of
 the reasons why Google has restrictions on both content providers and 
advertisers.  
Restrictions
Google restricts AdSense to 
non-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.
Google has additional restricts and may change their requirements at any time, so be sure to check their policies regularly.
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.
Learn how to ad AdSense to your Blogger.
The application process may take several days before approval.
Cost
It is free to place AdSense ads.
AdSense Locations
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.
Payment Method
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.
Disadvantages
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.
Advantages
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.