Smart pricing is the big unknown that can significantly reward or discount your clicks. In the email sent in 2004 by Google when it introduced smart pricing https://adwords.google.com/select/news/sa_mar04.html they explain smart pricing as

"if our data shows that a click is less likely to turn into business results (e.g. online sale, registration, phone call, newsletter sign-up), we may reduce the price you pay for that click … We take into account many factors such as what keywords or concepts triggered the ad, as well as the type of site on which the ad was served. For example, a click on an ad for digital cameras on a web page about photography tips may be worth less than a click on the same ad appearing next to a review of digital cameras."

So it is not a straightforward estimate – an advertiser paying $0.10 cents for a click from content network (Adsense publishers) does not give you assurance that you get 70 cents (assuming a 70-30 split with Google and publisher). It could be more, or it could be less depending on how smart pricing looks at your site. Webmasters continue to dissect what it is, how it actually works, how often it is applied — and WebmasterWorld alone has hundreds of threads on this topic.

The other factors are something you can control: ad impressions you can work to increase your traffic; CTR with your ad placement and layout. My site, an information site, is a perfect vehicle for Adsense and we get very good results (double digit CTR, and 5-digit monthly income). [Sorry can't reveal much lest I be in violation of Adsense TOS]

But not all websites fit well with the program, as we wrote in the article "Contextual Advertising: Why Are You Earning Only Pennies?" http://www.powerhomebiz.com/022006/adsense.htm — but it is how you experiment and play around the variables that you can control that can result to your earnings. Markus Finch’s PlentyofFish.com website earned millions because he has gargantuan traffic, even though his CPM and EPC are paltry. Fos us, we continue to experiment with the colors of the Adlinks, how to space the large rectangles, etc.

One excellent resource I suggest if you want more to understand Adsense is the Jensense blog http://www.jensense.com/ – this is written by the moderator of the Adsense forum at WebmasterWorld (Jenstar). You can learn a lot from reading her blog as she is very knowledgeable of the topic.

PS. Thank you for the invite to answer your question )
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