Google AdSense is a Pay-Per Click (PPC) service. Webmasters are paid a  portion of the revenue which Google collects from advertisers each time  a web site visitor clicks on an AdSense advertisement.
 
Each click may pay anywhere from a few cents to several dollars.  The  average click seems to be worth about $.20.  The more clicks AdSense  advertisers receive from your web pages, the more money you make.
 
The basic formula for thinking about revenue from Google AdSense is:
 
Revenue = (Impressions * CTR * CPC)
 
The methods of increasing your revenue from Google AdSense are:
 
- Increase Impressions 
 - Increase Click-Through-Ratio (CTR) 
 - Increase Cost-Per-Click (CPC) 
 
 
Increase Impressions
 
The most basic method of increasing your number of impressions is to increase the traffic to your web site.
 
The topic of increasing traffic to your web site is beyond the scope  of this article, and most likely something you are already working on.
 
One technique for increasing the number of Google AdSense impressions  without an increase in traffic to your web site is to motivate your  users to enable JavaScript.  Google AdSense ads require JavaScript.   Visitors to your website who do not have JavaScript enabled in their  browsers will not see your Google AdSense ads.
 
To encourage your users to enable JavaScript, create content for your  web page which is only available via JavaScript.  Implement browser  JavaScript detection in your HTML to notify visitors without JavaScript  enabled that they are only receiving a portion of your available  content.
 
Increase Click-Through-Ratio (CTR)
 
A small increase in Click-Through-Ratio can mean a large increase in  revenue. A rise from a CTR of 1.0 to a CTR of 1.1 should mean an  increase in revenue of 10%.
 
Several on-page factors can influence your Click-Through-Ratio. These factors include:
 
- Ad placement 
 - Ad color 
 - Ad unit style 
 - Total number of links 
 
 
Ad placement
 
The best location to place ads is wherever the web site visitor will be looking.
 
Open up your web page.  Where on the page does your eye immediately focus?  Place an ad there.
 
The best performing ads seem to be ads which are inline with content.   However, it can be very challenging to place inline ads across entire  web sites.
 
Placing ads across an entire web site is usually accomplished with  Shared HTML (shtml) and Cascading Style Sheets (CSS).  This effectively  limits ads to appearing in the same locations across a wide range of web  pages.
 
Ads On the Top of the Page
 
Ads in the page header perform moderately well.  The location is a  good one to catch a visitors eye.  However, many web users have  developed a condition known as "ad blindness" where their brains  automatically skip over advertisements.
 
One technique to reduce ad blindness is to place the advertisement  below the page header and as far into the content space as possible.  If  your content space can be divided into multiple sections, this may work  well for you.
 
Ads On the Bottom of the Page
 
Ads at the bottom of the page perform poorly.  Web site visitors tend  to read a page from the top down, and may never reach the bottom of the  page.  In addition, web site visitors have many different browser  sizes, which may cause them to never see the advertisement unless they  scroll down to it.
 
Ads On the Right Side of the Page
 
Ads on the right side of the page perform moderately well, and are  currently in vogue.  They appear to perform slightly better than ads on  the top of the page at the current time, most likely due to better  resilience to ad blindess.
 
When using ads on the right side of the page, it is important to test  your web page at several different screen resolutions in several  different web browers.  Your web pages should automatically resize to  ensure that the advertisements do not scroll outside of the browser  window or get "bumped" down below the content.
 
Internet Explorer appears to have a bug which can cause right side  ads to be "bumped" down below the content if the total width of all  sections of the web page is equal to 100%.  To work around this bug,  ensure that the total width of your web page is 96% or less.
 
Ads On the Left Side of the Page
 
Ads on the left side of the page may perform the best.  The left side  of the page is normally reserved for the web site menu.  This means  that users frequently look to the left side of the page.
 
The difficulty is determining where to place your web site menu when  the left side of the page is no longer available to you.  A top menu  might work for you, depending upon the design and content of your web  site. Placing your menu on the right side of the page is another option,  but one that may confuse some web site visitors.
 
If Google allows more than one ad unit per page in the future, the  left side of the page might become an excellent location for a single  ad, either above or below the menu.
 
Ad Color
 
Many webmasters report that brightly colored ads which contrast  sharply with the color scheme of the rest of the web page return  excellent results for them.
 
My experience has been that ads which mimic the look and feel of the  rest of my web page return the best results.  This is most likely  because the Google AdSense ads closely relate to the topic of the page  and therefore appear to the visitor as additional content.
 
Ad Unit Style
 
The Google AdSense programs offers a wide variety of ad unit styles and sizes.  The ad unit styles include:
 
  Ad UnitDimensions Leaderboard728x90 Banner486x60 Half Banner234x60  Button125x125 Skyscraper120x600 Wide Skyscraper160x600 Medium  Rectangle300x250 Large Rectangle336x280 Small Rectangle180x150  Square250x250  
 
Leaderboard and Banner ad units are obvious choices to placement in  page headers and footers.  Leaderboards are preferable, because they are  able to show more ads.  Banners are a classic web format, and may be  necessary where the width of your available space is limited.
 
Skyscrapers are an excellent choice for advertisements, because they  appear to be less vulnerable to ad blindness than the horizontal ad  formats.  Google recently added the wide skyscraper format.  This new ad  unit displays one more ad than the classic 120x600 skyscraper unit.  If  you are currently using the 120x600 skyscrapers, switching to the new  wide skyscraper format may increase your revenue from the Google AdSense  program.
 
Rectangles, Squares, and Buttons are best used when placed inside a  content area.  This makes rectangles more difficult to place, but also  gives then the best revenue potential.
 
Total Number of Links
 
Reducing the total number of links on your content pages can increase  revenue from AdSense by reducing the options for a visitor.
 
If your web page has fifteen links and one AdSense wide skyscraper on  it, the visitor has a total of twenty options for leaving your page  without closing the browser window.
 
This means that, if the user clicks on a link, the random odds that the visitor will click on an AdSense link are 5 in 20.
 
If you reduce the number of other links on the page to 5, the total  number of options presented to the user is now 10.  This means that the  random odds of a user selecting an AdSense ad are now 5 in 10.
 
Another option, but one which may annoy your web site visitors, is to  open all external links in a new window.  This will leave your page  open in the users browser, giving them another opportunity to click on  an AdSense link.  This can be done by adding target="_new" to your HTML  links, or by converting your outbound links to JavaScript.
 
It should be noted that Google AdSense never opens ads in a new window.
 
Test, Test and Test Again
 
Testing is the key to increasing your CTR percentages.  Change your  ad colors, wait a week and look at the stats.  Do the same with  different ad units and different ad placement.
 
Increase Cost-Per-Click (CPC)
 
Not all Google AdSense ads are created equal. Google AdWords  advertisers bid for keyword combinations, and some combinations are much  more expensive than others.
 
The Google AdSense robot, Mediabot, automatically scans your web  pages and determines the appropriate ads to display on your page.
 
It is possible to create web pages which are designed specifically to attract certain keywords from the Google AdSense program.
 
To determine which keywords have a higher Cost-Per-Click, create a Google Adwords account in the Google AdWords advertiser interface.  This will enable you to determine roughly what AdWords advertisers are paying for each keyword combinatiom.
 
Based upon this information, you may decide to create a new web page or a whole new web site.
 
AdSense Alternate Ads
 
Google AdSense is not always able to find an advertisement which  matches the content of your web page. Normally, AdSense selects a Public  Service Ad (PSA) and displays it in your ad space.  These PSA's  generate no revenue for you.
 
Google has created the ability to load an alternate ad when it cannot  find a matching ad. This is accomplished by setting a variable called  google_alternate_ad_url in your AdSense layout code:
 
 google_alternate_ad_url = "/adsense-alternate-ad.shtml";
 
These alternate ads can include advertisements from Google AdSense competitors, such as Clicksor.
 
This capability enables you to tap into a revenue stream which would normally by lost to AdSense PSAs.
 
Future Improvements to AdSense which will Increase Revenue to You
 
Google is constantly improving the AdSense program.  Many of these improvements will mean additional revenue in your pocket.
 
Google has recently improved the speed with which MediaBot accesses  new web pages. This means that you start earning revenue more quickly.
 
Google is constantly working to improve the relevancy of AdSense ads.   Ads which are more relevant are more likely to be clicked on by web  site visitors.
 
Google is currently working to give webmasters the ability to place  multiple AdSense ad units on the same web page.  This will enable the  webmaster to place five small single-ad units around the web page,  instead of one wide skyscraper. This should considerably reduce losses  from ad blindness.
Source: webpronews.com