I've played with google adsense a bit in the past, but I've read a few things that seem to indicate that it's not as lucrative as it used to be.
YES Adsense still is a good way to make money. But you have to take into consideration:
- the stinking economy, which means lesser advertisers and lower bids for the keywords
- the sheer number of Adsense publishers
But it can still make you money, with the right website. Remember, the most vocal complainants are those who don't know how to use it and/or whose earnings have dropped significantly. But there are webmasters still earning great chunks of dollars from the program, as long as you consider the following factors:
1. Responsiveness of audience to the ads = A travel website that provides information on travel to Spain will attract visitors looking for ways to arrange their travel and spend money on their vacation to Spain. Your site provides the info, but the ads will provide hotels, travel agencies, tourist destinations, car rentals — ads that are likely to get the attention of the users of your site. This is a site that will most likely do well with Adsense. However, if you are a gaming website where the main purpose of the user is to play games on your site, then Adsense will not perform as well.
2. Ad format = some types of ads do better than others depending on your content and layout. In our case, large rectangles in the middle of the content is the best, while leaderboards do not generate as much as income. Skys are the worst for us. Experiment and measure the results via channels and see which formats work best for you.
3. Ad placement - check Google's heat map as they have tested where the best placements are https://www.google.com/support/adsense/bin/answer.py?answer=17954&ctx=en:search&query=adsense+heat+map&topic=0&type=f
4. Ad colors - sometimes ads blended into the content works wonders, but sometimes ads that contrast your site colors work best
5. Number of ad units on a page = we are allowed maximum of 3 ads + 1 ad links + 1 search box on a page. Maximize the allowed number based on the resulting look of your page (you don't want an overkill of ads). Users going to your page and reading your content may ignore the banner or rectangle at the top of the page, but may click on the ad at the bottom of the article
6. Smartpricing - the big unknown in Adsense. No one knows how this actually works. But it can affect the pricing of the ads on your site. If the advertiser paid for $0.50/click - but your site is smartpriced - then the cost may be discounted lower (e.g. $0.25). So you may try to develop a site based on high paying keywords but if smartpricing gets to you, then you may not get as much per click as what you are expecting from your keywords.
Here is Google's explanation of smart pricing https://adwords.google.com/support/bin/answer.py?answer=9562&query=smart+pricing&topic=0&type=f
Google's smart pricing feature automatically adjusts the cost of a keyword-targeted content click based on its effectiveness compared to a search click. So if our data shows that a click from a content page is less likely to turn into actionable business results — such as online sales, registrations, phone calls, or newsletter signups — we reduce the price you pay for that click.
Experiment with the factors above (except smartpricing, which you can't control), and see which combination works best. Remember though that not all sites do well with Adsense - even if you get gazillions of traffic but your visitors are not interested in looking for ways to spend their money, they won't be interested in your ads and won't click.
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If you are an AdSense publisher, you can use Google Analytics to see and perform in-depth analysis on your AdSense data. Learn how in this video.