[Some simple math: Your AdSense Earning = Impression-count x Click-though-rate x Cost-per-click x smart-pricing-factor.
The Impression count is referring to the traffic on your adsense-filled pages. It means the number of times AdSense blocks are displayed. The higher this number, the better. Why? Simple, the more visitors you have, the higher this number. The higher this number, the more people see your ads. The more people see your ads, the more chances that someone clicks on them! Improving this number is done by increasing the number of visitors to your website. This can be done through normal SEO techniques, link-building, great content that is known to the outside internet-world,…
The Click-through-rate (CTR) is the ratio of clicks per impressions. This number can have any value from 0.1% to 30%, but most people’s CTR is around 1% to 10%, where 10% is already VERY good. The higher the numbers here, the better your site is performing of course. You can improve this number by experimenting with your ad-blocks, try different sizes, placements, and colors. Top earners should be the 300×250, above the fold of your page (meaning: where it is visible without the visitor having to scroll), and with colors that blend in with your site.
The Cost-per-click (CPC) is what you earn per click on one of your ads. While traditionally it refers to what advertisers pay per click, it can also refer to what publishers are paid for each click. Increasing this number is not that easy. Known methods are filtering out bad paying ads, writing around well paying keywords, and showing Google which blocks of your site to use, and which not to use.
Smart-pricing is the method AdSense uses to determine of how much value the clicks from your site are. If clicks on your site do not provide much value to your advertisers, you will only get part of the supposed CPC. An example: say you are writing an English blog about law in Belgium. Visitors come to your site from all over the world. However, the ads served on your website are for litigators in Belgium. The chances that someone in the US will click on those ads, and hire one of those Belgian lawyers is rather small. Depending on the niche you are writing about on your website, this can be a big or a small problem, since adsense tries to localize its ad-content to the place where the visitor resides, not the website itself.
