With the consent of site owner small contextual ads are published which is known as Google Adsense. Publishers that are selling products and/or creating brand awareness create the ads. The created ads are called Adwords that is also a Google sponsored program.
There is a very tight relationship between Google Adwords and Adsense. Google earns revenue from the ad creator if an ad is clicked after a user has performed a search on Google or one of their partner networks. This has become known as "pay per click".
Now the beauty of Adsense is that the person who owns or hosts the site that the Adwords ads appear on will split the amount of money that Google receives from the creator or publisher of the ad. It is not common knowledge exactly what the percentage split is, and it is not always the same, but let's assume for our purposes 50%.
If a publisher is willing to pay .40 per click for his Adwords ad, then the host of the site that welcomes Adsense can expect to see roughly .20 every time someone clicks on that ad that appears on their site. The other .20 is kept by Google. So Google and site owners are sort of like partners in this.
Adsense is shown in the most relevant way possible. In what way? The easiest way to see this is by looking at an example. Mary hosts a site dedicated to women's clothing. If Mary wanted to monetize her site with Google Adsense the ads that would be shown would all be related to clothing, and more precisely, women's clothing. If she had a page devoted to shoes, then any Adsense ad on that page would be for women's shoes.
So how do we calculate how much revenue a click generates? The Adwords program takes care of this. Keywords are bid on by Adwords publishers. The amount that the publisher will pay per click is dependent on the value of the keyword. The range of values for each keyword can be from a few cents to more than $50 per click.
Anyone with a site that generates a decent amount of traffic can make some nice money by putting Google Adsense on their site, you don't need rocket science to understand that. Specific content is created by Internet marketers with the sole purpose of attracting high paying Adsense ads.
