So you want Google to fill your space with blurbs likely to interest your readers" (Millstein and Dornfest, 2005). The amount of money one can make based on AdSense is variable -- it is entirely dependent on the narrow focus of your site, the number of visitors you receive, and whether your visitors are interested enough in the advertisement to click through.
Dahl, D. (October 14, 2009). Real-Life Lessons in Using Google Ad Words. The New York
Google's AdWords are keyword driven ads that appear to clients along the right-hand side of a Google search page under a title that says "Sponsored Links." People who search for the terms the advertiser selects "Flowers in Chicago, flower delivery in Chicago, roses in Chicago, fresh flowers, etc.) will see these ads. Where your ad appears on the page is entirely dependent upon how much you, the advertiser, are willing to spend on the marketing campaign. The more you allocate to the campaign, combined with the relevancy of the ad, the higher the ranking. The service is a pay-per-click format, so the advertiser only pays Google if someone clicks on the ad. Now, the caveat -- Google is providing a service that allows you to reach more potential buyers who may or may not click into your site. However, you are charged if the potential customer "clicks" on the ad, not whether they read your site, stay on your site, or purchase from your site.
AdWords is very specific in its use for bloggers and businesses. The potential customer must know the terms you are using or your ad will not appear. For instance, in the article, a company used the specific term "airline seat back organizer" for their product, and bid $.05/click. After running for several weeks, they realized that people were unaware seat back organizers even existed, so the term was rarely used as a search term. However, if this same company wanted to pay for the term "travel accessories," the cost per click would rise to over $1.00.
The key to the successful use of AdWords is to set a realistic budget, focus on local markets, and narrow the keyword net. If you are a flower shop, be wary of using key words like "roses" that may produce thousands of hits, but no sales. Track the efficacy of the advertisements as well, it is easy, say at $.40/click, to rack up 100 clicks in a morning, and if done daily, this becomes a whopping $1,200/month advertising fee. If your product sells for $20, and your profit margin is 25%, you must then sell 240 of the product simply to break even on the advertising investment. This may not be appropriate for every product. One must also decide how much a customer is worth -- not a purchase. If the item is disposable, for instance, and the customer will likely purchase 6 per year at $50, then each customer is generally worth $300 in sales. If your AdWords average per client is $20/new client, this is a good investment; but if it costs $200/customer, then it will take a long time to recoup the investment.
The is also the option of outsourcing your campaign to a firm that specializes in running algorithms to find the best search engine words possible. Many times the initial expense for this can be high, but the overall effectiveness may make more sense. Pay-Per-Click advertising is certainly a way of life for the Internet blogger or advertiser, and can be lucrative. Ultimately, though, the campaigns carry risks and the burden of regular monitoring falls upon the owner.
What is Google AdSense, and How Do You Use AdSense to Make Money Online? YouTube.