AdSense is the publisher counterpart to Google's advertiser program, AdWords. AdWords allows companies and others to buy advertising on a per-click basis. When someone clicks an ad, the advertiser is charged and Google makes money. If the click comes through a publisher's site running AdSense, the money is shared with that publisher.
Setting up a site to make money from AdSense is fairly simple. For best results, you should set the site up on its own hosting plan. By having your own web hosting plan, you gain more control over what you can show on its site. Some free alternatives don't allow any commercialization, which clearly makes them unsuitable for a site you intend to put AdSense or other ads on. With your own web hosting account, you can put as many ads on your pages as AdSense allows.
Once you have a home for your new site, your next task is to decide what platform to build it on. While many webmasters still use old-fashioned HTML coding, it's far easier to use a blogging platform. Platforms like WordPress do all of the technical heavy lifting, while you simply choose a theme and start putting up posts. WordPress also has options and plugins that make it easier to gain search engine rankings.
After you've decided how you want to build your site, it's time to decide what subject to focus on. To make money with AdSense, avoid focusing only on what interests you. Instead, use common sense and keyword finding tools to determine which subjects are the most profitable. Make sure to avoid saturated niches like "mesothelioma lawyer" unless you are very good at search engine optimization (SEO). Instead, choose smaller but far less competitive niches. You'll almost always make more money in the long run if you aren't butting heads with tons of experienced competitors.
Now that you've picked your subjects, it's time to add the content. The Google AdSense program has become much pickier about quality than it once was, so you'll need to use some excellent informative text on your pages. Writing it yourself is easy if you're fairly good at the English language and know how to research. If you're a poor writer, or just don't have time to spend coming up with a site's worth of information, buy articles from professional ghostwriters.
The next step is to add AdSense ads to your pages. Google offers a wide choice of AdSense block sizes and styles. Choose prominent versions. Remember, your site is there to make money, not look pretty. Google will suggest ad sizes on the page you get the ad code from. They're a good starting point for a first site. Experiment with other sizes too, since there are variations in the way different readers respond.
Choose platform and start optimizing
Once all of the above is done, it's time for some serious SEO. If you chose WordPress as a platform, change the display URL to show the post name instead of some random date. Also, install plugins like the All in One SEO Plugin to automatically take care of things like canonical pages, title tags, and meta information. Add a Google Sitemaps plugin to automatically send Google, Bing and Yahoo a copy of your sitemap every time you add a post.
If you don't use WordPress, there is no need to despair. You'll simply need to add your meta information yourself and make sure not to create any duplicate pages. Google also has a sitemap generator that can be used through its Webmaster Tools system to easily make sitemaps for your non-WordPress site.
The most important part of SEO is getting links to your site. On page optimization is important, but links are king. Work to get as many quality links to your site as possible, and never stop these efforts. Google still uses links as a strong indicator of site popularity. With enough of them, your site will soon rise in the search rankings.
There's a lot of money to be made
The amount of money that can be made through AdSense is tremendous, thanks to the huge amount of advertisers willing to pay huge fees to show up in top AdWords positions. There are many webmasters who make many thousands of dollars a month with AdSense. The most famous is likely Jeremy "Shoemoney" Schoemaker, who is known on the Internet as the man who is seen in pictures holding a check from Google for $132,994.97. While only the most successful can look forward to making that much from Google in a month, it is quite clear that it's possible to become extremely wealthy with AdSense.