By far one of the easiest ways to make money online is to place Google Adsense ads on your blog or website. You make money when visitors come to your site and click on the Google Adsense ads, albeit a little money. The nice thing about Google Adsense is that you don't need a sales team to sell advertising, and the ads are usually very well targeted and relevant to the content on the pages of your website.
Starting Out with Google Adsense
With that said however, while it's easy to make money with Adsense, if you are just starting out, it's not very easy to make a lot of money with Adsense unless you have a large amount of traffic (a.k.a visitors and page views) coming to your site every day. How much money you make with Google Adsense will also depend on the niche your website or blog is geared towards because this will play a significant factor in how much traffic you recieve, as well as how much you'll make per ad click.
For instance, a website in the financial sector might garner anywhere from $.50 to $2.00+ a click on average, but a site that is dedicated to funny pictures might only average $.10 to $.15 a click. This means you would need a lot more visitors to the funny picture site to even come close to making the same amount as you would from the Financial website per 1,000 visitors. Also you have to keep in mind that the Funny picture site will most likely get a much lower click-through rate (CTR) on the ads, making it even more difficult to make a lot of money.
To help make more money with Google Adsense, you also need to pay close attention to the placement and color of the ads on a page. The ad placement can make a huge difference in the click-through rate (CTR), and ultimately how much you make per day. To get more clicks you will want to make the ads look like the content on the page. This means you'll typically want to stick with a white ad background and make the title links the same color as the links on the website. Ad sizes of 300x250, 336x280 and 728x90 will usually garner the best CTR. You may also improve the chances of your Google Adsense ads getting clicked on by placing ads directly into the content of an article. This makes the ad unit look like it's actual content (and not an ad), thus increasing the likelihood that it will get clicked.
Traffic = Money
So with that basic overview, there's a couple ways to make decent money with Google Adsense. The first way is to build a blog or website that gets a ton of Traffic (page views & visitors) per day. For example, let's say your site gets an average of 10,000 visitors a day with an ad CTR of 1.0% (100 clicks per day) and a cost per click (CPC) of $.50, you're site will essentially make $50 a day. Not bad for passive income, but $50 a day is not a lot if you're planning to live on your Adsense earnings, and will also take a lot of hard work to get a site to 10,000 visitors. Keep in mind, most sites don't even come close to this amount of traffic, and the sites that do get this much traffic per day often have taken years to build up to that amount. However, if you do get a site to 10,000 visitors a day or more, there's lots of other ways to monetize your site besides Adsense, so there's much more opportunity to make even more money.
Made for Adsense Sites
A second approach that some webmasters take to make money with Google Adsense is to make a bunch of different sites targeting high CPC niches with low competition where the opportunity to make $1.00 to $2.00+ per click is much greater. So while the site may only get a few hundred visitors a day (or less), the sites are setup in such a way that there is a high likelihood that these visitors will click on ads when the get to the site. To name just a few niches where this is done are: Auto Insurance (targeting individual States), Security Guard Training, Nursing Certification, etc. You can use the Google Adwords Keyword tool to find other niches. Typically, for these type of sites, people will buy domain names that will have the exact phrase of the main keyword that you are targeting.
The primary goal of these made for Adsense sites are to get users who visit the site to click on the ads once they come to the site. Often the sites are not "pretty" looking, but rather very basic in nature with as little as 20 pages of content. While this approach has worked well for some in the past and will probably in the future, the Google search engine is getting smarter and smarter, so if you build sites with little content, that never gets updated your chances of getting good rankings are only going to get harder.
Passive Income...
So while Google Adsense can be a great way to make money online and a nice source of passive income, it's by no means a way to get rich quick, especially when first starting out online. It will often take a lot of work and time for newer sites to move up in the search engine rankings, to make a significant amount of money from your websites when using Google Adsense alone.