Many bloggers choose to monetize their blogs using Google AdSense. Even though WordPress is a rival with Google's own blogging platform, Blogger, it is not very difficult to add AdSense to a self-hosted WordPress site. You can insert ads practically anywhere on your blog, such as at the top or bottom of a post or on a sidebar. Experiment with different positions to see which get you the highest click rate and make sure your blog meets Google AdSense standards.
Instructions:
Setup
1) Log into your Web hosting account. Install the WordPress package in the root directory of your domain, such as yoursite.com or wherever you wish to install your WordPress blog. Follow the instructions of your Web hosting provider. When you install WordPress, note your administrator user name and password.
2) Log into your Google AdSense account. Click "My ads" on the menu and then click "Get code" under the name of the ad unit you want to use. Click the code, right-click and select "Copy."
3) Sign into your WordPress account using your administrator user name and password.
Sidebar
1) Look on the left navigation bar in WordPress. Click the drop-down arrow next to "Appearance." Click "Widgets."
2) Click the sidebar where you want to insert the AdSense ad. For example, click "Sidebar 1."
3) Look in the "Available Widgets" area. Click and drag "Text" over to the sidebar. When the dotted outline of a rectangle appears, drop the text widget.
4) Drag the widget up or down to position it where you want the AdSense ad. If there are other widgets in the sidebar, as there usually are, you will probably want to move the newly added widget to where you expect it to get clicks without disturbing user experience.
5) Click the drop-down arrow next to the "Text" label. Enter a label for the widget, such as "Advertisement."
6) Right-click the main input box. Click "Paste" to transfer the AdSense code into the widget.
7) Click "Save." Click "Close."
8) Click the name of your WordPress site on the top left of the page to view your blog. It may take a few minutes before Google generates ads for the unit.
Single Post
1) Click the drop-down arrow next to "Appearance" and then click "Editor" to open the "Edit Themes" page.
2) Click "Single Post" on the list of PHP files on the right.
3) Scroll down the code area to find the following line, or similar: '); ?>
4) Right-click and hit "Ctrl" and "V" to paste the AdSense code below the above line. This will place the ad immediately below the WordPress post content. You can also add formatting such as "" to align the ad as you like.
5) Click "Update File" to save the changes.
6) Click the name of your site on the top left of the page. Click a post title to see how the AdSense ad appears on a single post.
Tips and Warnings:
If you use the old AdSense interface, the directions for finding your AdSense units are different. Click "AdSense Setup," click "Manage Ads" and then click "Code" next to the ad unit you want to use. Click and copy the code in the same way as you do in the new AdSense interface. Do not put misleading labels on the widgets where you put AdSense, such as "Great links here." Each WordPress theme may have a different code from others. Back up your WordPress theme and blog content before you make any changes to them. Follow your Web hosting provider's instructions for backing up files.
Source - eHow
