Ads can work well in-between other stuff. On a games site of mine, some of the games don't contain ads next to the game area; the AdSense ad will only be shown in-between game rounds. This is the time the visitor is not concentrating on performing a task but might take a small break, and be open to the option of visiting new sites.
Put too much emphasis on AdSense and your site may be linked to less. The more available space you dedicate to AdSense on your site, and the less you differentiate between ads and content in your design, the more money you earn with the program, right? Not quite. While pushing the AdSense may result in short-term gains, it might also convince some visitors that the site is too crowded to be worth visiting again. And some of those visitors may also be bloggers or other people who might otherwise help to promote your site with links to it. And the less your site gets linked to, the less traffic it gets, meaning AdSense revenues may go down in the long term.
Even if you get huge traffic, the AdSense income from the site is more dependent on the site type and audience. Google targets AdSense ads automatically to the site content. Or at least, it does so ideally – but some types of content fare better than others with this targeting. I noticed for instance that AdSense does better on a games site than on a technology blog. I also heard people say that AdSense does quite good on product oriented blogs; say, one post solely about the iPod; another post solely about Gadget XYZ, and so on.
Image ads can be relevant and work for you, but they might also apall some visitors. Google's AdSense program gives you the option to choose between a couple of different ad formats. Two main groups are text ads vs text & image ads. When you choose the latter, Google will deliver what they deem works best for your content (or so one would hope, and it would be in Google's best self-interest to serve you the best possible ad, it seems).
However, Google doesn't really know your layout preferences, and they don't really understand when your audience thinks ads are "too much"; and considering image ads include Flash animations (which you can't disable, once you go for image ads), Flash animations may well push some people away. One thing you can do is to only show image ads in areas where they don't disturb the content, e.g. at the end of posts. Also, you might want to listen to visitor feedback on the ads being served; I received emails before that the blinking ad on this or that site made a person want to leave the site, at which point I blocked the specific advertiser via the AdSense Setup -> Competitive Ad Filter option.
When it comes to context sensitive targeting, you can increase or lower the importance of certain parts of your page. To help Google find a matching ad for your content, you can use the HTML comment syntax by encapsulating more important parts with
<!-- google_ad_section_start --> ... your important site content here ... <!-- google_ad_section_end -->.Or, to lower the importance of a section, use:
<!-- google_ad_section_start(weight=ignore) --> ... your not so important site content here ... <!-- google_ad_section_end -->(Google notes that it may take up to 2 weeks for this change to your site will be taken into account by the AdSense.)
Be aware of risks when you change ad layouts too much. I once had a system on the server to randomly differ between various AdSense layouts on the same page. Doing so I was hoping to add some good variety to keep the ads at least somewhat interesting and notable. Shortly after I stopped doing so and simply included a rather big static area for the AdSense to "do what it wants," the AdSense revenues for that site increased. Now, I don't know if this was a coincidence of some sorts, as revenues often go down or up even when you don't do anything, but it might well have been that there was a connection between adding too much homemade randomization, and lowered revenues.
At another time, during the redesign of this blog, I switched from one ad format to another for the end-of-posts AdSense ad space. This, combined with perhaps other layout changes, suddenly cut the ad revenues in half for the blog. It took me some time to realize that I had some ad channels* set up for the specific old layout size, and by changing this I must have kicked out all those advertisers who were pushing their ads through the channel.
*This setting can be found at AdSense Setup -> Channels.
Use competing ad systems when AdSense doesn't seem to work for a site. At CoverBrowser.com, which shows galleries of comic and book covers and so on, I tried including AdSense ads in "non-annoying" places in the layout (including trying to use AdSense affiliate links via AdSense Setup -> Referrals), but this didn't seem to work at all. However I then tried "affiliating" the "buy" link below individual covers, utilizing the eBay affiliate commission system offered by AuctionAds.com*. (Disclosure: Patrick Gavin, co-owner of AuctionAds, paid me for consulting before on other projects, like Sketchcast.com.) This worked a lot better, and as it was simply connected to an existing site feature, it also didn't add clutter.
A good start to find other ad programs is to search for adsense alternatives on Google... you will see a lot of lists which are dedicated to competitors. (Note that some of these competitors may be US-only.) You may also want to join an ad or blog network like The Deck, Federated Media (disclosure: I was part of Federated Media before), or 9 Rules. Before joining such a network – which might require you to show them your traffic stats and so on – check if their typical ads and campaigns fit with your site layout and your general ad type preferences.
*CommissionJunction also offers an eBay affiliate system but CommissionJunction has really low usability, in my opinion; setting it up is confusing.
Sometimes you may get a sudden increase in traffic, hence ad clicks, but you can't locate the source of the traffic. I'm using Google Analytics to track my sites, though AdSense is also a good first indicator of traffic explosions... because it will show the combined page views of all your sites (provided you include AdSense on all of them), as opposed to Google Analytics, where you need to check site by site individually.
However, sometimes even with Google Analytics, you won't be able to locate the source of your traffic because there's no specific new popular referrer being shown (a referrer is the site linking to your site, provided people click on that link). In these cases, it may well be that your site has been discussed in a TV show or similar, as the show won't "link" to you (but audiences will be entering your domain manually into the browser when they like what the saw on TV). When you feel that there has been a traffic explosion sometimes you may get additional email feedback in regards to your site, and it makes sense for you to ask your visitor: where did you first find out about the site? Maybe the can let you know about the name of the TV show, or magazine, or other "offline" source responsible for the peak. (I sometimes sent pointers to the BBC Click show for instance, with partly enormous effect.)
Consider using AdSense even when the page doesn't get any traffic yet. Who knows, some day the traffic suddenly explodes, and you might not realize fast enough and thus miss out on the action (as sometimes, traffic goes as fast as it comes).
On the other hand, reversely I would suggest to never do a site just to make ad money with it. That kind of motivation may lead to spammy sites that don't help anyone really. (If a project is great, it's great even if it doesn't make any money.)
Making money with AdSense takes time. In my experience, it may take many months to years for a site to gain enough traffic to make OK money through AdSense... if ever. I have almost never experienced any site making quick and easy money with AdSense (though you may be getting quicker results than me of course, as it depends on so many variables!).
I think for any site getting a couple of thousands of visitors a day, you might want to start playing around with AdSense to see where it takes you (if you didn't already include AdSense anyway just to see what happens, and following up on tip #9). As you are paid in US-$, the actual benefit the ad revenue will bring depends on your local costs of living as well (you might even ponder moving or going on an extended holiday trip if your local costs of living are too high for your site revenues to cover).
PS: What are your AdSense tips?
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