How does Google AdSense work?

Usually the first way bloggers choose to monetize their blog is by placing contextual ads on their pages. Google Adsense is a no brainer when it comes to contextual ads. Everyone is excepted into the program, it is easy to setup and implement, and payments are always on time.
Google Adsense provides you with a number of ad formats – image or text based. Implementing AdSense is very easy. You specify your preferences and JavaScript is then generated which you copy and paste into your page source code where you would like the ad to display. You can use the same JavaScript code on any of your websites.

Each time the page is viewed, the AdSense bot queries Google. If the page isn’t listed in Google or has changed, then the bot will scan the page to determine what ads to display. The Adsense bot can be easily identified in your server logs – it’s called Mediapartners-Google/2.1

Revenue generation will be dependent on a number of factors:

- The number of pages viewed per day
- The topic of your content
- The price paid by the advertiser for each click
- The number of people who click on the ads

This doesn’t mean to say that if you only generate a few hundred page views a day, you’ll receive a pittance. In fact, light traffic sites can generate substantial revenue if their topic covers a very competitive market.

Will AdSense boost my Google rankings?
No. AdSense and general Google search engine rankings are two totally separate beasts, but effective search engine optimization will assist in getting the most relevant and higher paying ads displaying.

Adsense don’ts
While Google is a nice partner to work with, they are strict on a number of issues.

- Once you implement the code, do not click on the ads yourself. Given the amount that some advertisers are willing to pay, Google is very, very sensitive to click fraud.
- Tell anyone else using a computer from your home not to click on the AdSense ads, just to be safe.
- Do not ever, ever try to “game” the system. Google is well aware of most of the tricks people use to engage in click fraud and pursues those people vigorously
- Don’t implement AdSense code where no-one will see it.
- Don’t incentive AdSense ads by offering rewards to visitors for clicking on ads.
- Don’t beg for clicks e.g. “help support this site, click on this ad”
- Don’t place AdSense ads on an empty page.
- Any of the above can result in your AdSense account being suspended.

In Conclusion,
- Read the AdSense rules and abide by them.
- Generate extra traffic to your site by building links fairly.
- Sit tight and be patient.

Here is Interesting read on how to customize search experience for your website using Google Adsense on Adsense’s Blog at link below:

http://adsense.blogspot.com/2009/10/more-customized-search-experience-for.html