Google's AdSense is a superb revenue generating opportunity for small, medium and large websites.

Some webmasters are designing brand new sites specifically for serving AdSense ads. (It's against the AdSense rules to design a site purely for AdSense ads, so you'll want to include a few affiliate links or sell your own product, too.)

Here's the background info, from Google:

AdSense overview
AdSense Help Center
AdSense policies
Google's Inside AdSense blog

AdSense allows you to serve text-based Google ads - and/or image ads - on your website and receive a share of the pay-per-click payment. AdSense text ads are similar to the AdWords ads you see on the right-hand side at Google when you do a search there. You can choose from a variety of ads sizes and choose whether or not you want to display image ads.

It's often much easier to generate revenue from AdSense than from an affiliate program, especially if you don't like selling.

AdSense's advantages

AdSense is simple to join.

It's easy to paste a bit of code into your pages.

It's free to join.

You don't have to spend time finding advertisers.

Google provides well written, usually highly relevant ads - automatically chosen to closely match the content on your pages.

You don't have to waste time choosing different ads for different pages.

You don't have to mess around with different code for various affiliate programs.

You're free to concentrate on providing good content and Google does the work of finding the best ads for your pages from a massive number of AdWords advertisers.

It's suitable for beginners or marketing veterans.

AdSense provides simple, easy-to-understand stats.

If you have affiliate links on your site, you ARE allowed to add AdSense ads. However, with your affiliate links or other ads, you must not mimic the look and feel of the Google ads.

You can filter URLs, so you can block ads for sites that don't meet your standards. You can also block strong competitors.

Inevitably, AdSense is competing strongly for space on web sites with all other revenue sharing opportunities.

If you own a small website you can plug a bit of AdSense code into your site and almost instantly relevant text ads that are likely to appeal to your visitors will appear on your pages.

If you own several sites, you need apply only once. This makes AdSense much simpler than joining a bunch of affiliate programs.

To earn revenue, you don't have to make a sale. All you have to do is get the click.

As you can see, I'm really keen on this revenue sharing service.

Disadvantages

The stats Google supplies are inadequate. They're easy to understand at a glance. However, they don't tell you exactly which ads people are clicking on, or which keywords are involved in getting those clicks. That's frustrating.

Also, I'd like to be able to identify and block ads that have very low payout rates, without doing a lot of sleuthing and messing around.

The minimum payout is $100, which is regarded as too high by newcomers. This won't worry experienced webmasters.

Another disadvantage is that Google doesn't allow you to share your stats with other webmasters. The AdSense Terms and Conditions say:

"Confidentiality. You agree not to disclose Google Confidential Information without Google's prior written consent. 'Google Confidential Information' includes without limitation: ... (b) click-through rates or other statistics relating to Site performance in the Program provided to you by Google..."

That's weird. Website owners need to be able to share such information and openly discuss successes and failures.

Another disadvantage is that Google doesn't say how much its AdSense partners will receive. You'll just receive an unknown portion of the amount advertisers pay.

Only a company with the goodwill and respect Google has earned could get away with such a cheeky offer.

So the only way to know how much you'll earn is to try it and see. If you want to bail out, all you have to do is remove the code from your site.

However, I can tell you after several years of using AdSense  (more about that and more AdSense tips later) the strong advantages heavily outweigh any disadvantages.

Don't put all your eggs in the AdSense basket. If Google discovers fraudulent clicks on ads appearing on your pages, it can dump your site from the service, and refuse to pay you all revenue owed. Some webmasters who claim total innocence have had this happen to them.

Since AdSense was launched, Google has made several changes to its AdSense FAQ (now Help Center), clarifying various things. For example, Google now says you are not allowed to own several accounts with the funds going to one payee.

AdSense Channels

Some time after the launch of AdSense, Google added "channels" which improve the tracking of results.

I strongly recommend you experiment with AdSense channels. For example, you can create a channel for your ads displayed at the top of your pages and compare the click-throughs and revenue with those of ads at the bottom of pages. You'll find that ads published high on the page usually earn more revenue than ads placed lower down.

You can create channels for different sections of a site, or for different websites.

For can even create a channel for one specific page. Doing this can teach you that a specific page is earning 10 times or 20 times the revenue of another page. Now THAT'S worth knowing! You might want to direct a few more links to that page, and perhaps write more articles on that particular topic.

I've heard that sites containing "excessive advertising" are being rejected.

PLEASE read the AdSense rules. If in any doubt, ask their support staff. They're very helpful.

This is a 10-part article. It covers...

Experiences with AdSense
How much can you earn? (different ways to reach your goal)
How AdSense matches ads to web pages
Will the AdSense ads appear on your page?
Why are the wrong AdSense ads being displayed?
Affiliate programs versus AdSense earnings
How to increase your AdSense earnings (lots of tips)
You want profitable keywords: high demand, low supply (and how to identify them)
5 ways to do keyword research for AdSense pages (and the best tool to use to build your site)

NEXT: Experiences with AdSense