You can make money either directly from your blog or make money because of your blog. In the “direct” option, you show advertisements to your visitors or sell affiliate products while in the other case, you make money indirectly as blogging can help you find a new job or get freelancing work (after all, your blog is a portfolio of your thoughts, ideas and skills.)

To display advertisements on your blog, you can either partner with existing advertising programmes (like Google Adsense, Chitika, etc) or contact prospective advertisers directly (say you have a popular blog about Sports Shoes, then Nike or Reebok could be interested in showcasing their products to your visitors).

We will first discuss the popular advertising programmes and then suggest a few other approaches to generate income from your blog.

BlogAds are the pioneer in blog advertising. BlogAds generally pay well and also provide you the liberty to choose which ads are displayed on your blog. The other big advantage is that BlogAds offer a fixed payment irrespective of the number of site visitors. But the downside is that you can gain entry into the BlogAds network, only when your website receives a decent amount of traffic and some advertiser is willing to sponsor you. That could be a huge requirement for a new blog but established bloggers should consider BlogAds, provided they find sponsors.

The biggest and most famous player in web advertising is Google. Their Google Adsense programme is hugely popular because it offers contextual ads, meaning Google spiders scan the content of the webpage on which Google Ads would be displayed and then show ads based on the context of the content. Contextual Ads offer very good returns, as site visitors are more interested in knowing about products that are related to the content they are reading. For example, someone reading about cars will show more interest in advertisements about car loans than in software like Microsoft Office. Google algorithms make sure that your site visitors see only relevant ads.

Getting Google Adsense ads for you blog is very simple. There are absolutely no pre-requirements like finding sponsors or site traffic levels or geographic location except one - your blog should stay away from topics like gambling, piracy or sexual content. Once you fit the bill, applying is a one step process. Google engineers review your site the next day and send you a small “ad code” that you can integrate in your blog. Ads start getting displayed almost immediately.

Google Ads can be either “Pay per Click” or “Pay per Impression”. Their reporting system is almost real-time – you can check at any time of the day what your earnings have been since the start of the day. Google even has the largest pool of advertisers, so you can virtually write on any topic and Google will find relevant ads for you. Also, Google Adsense is more suitable for Indian Publishers as Google sends a monthly payment cheque in Indian Rupees so you save paying bank commissions for international transactions. Highly recommended.

Chitika is another player though relatively new. Chitika Comparison Shopping Ads are generally more popular on product related blogs that write about gadgets, clothes, software since Chitika displays merchandise from Shopping.com. Chitika Ads, known as Chitika eMiniMalls, are presented in an interactive ad unit – one can compare prices from different merchants, read the main features of a product and even search the shopping database – everything inside one ad.

Chitika is known to offer good returns but there’s one drawback. Though anyone can apply for their programme, Chitika won’t pay you for traffic from India, Pakistan and some other countries. That means if a site visitor in India clicks a Chitika ad, the site owner won’t receive any benefit. Sites that primarily receive traffic from US, UK can consider Chitika as a good alternative.

TextLinkAds and Adbrite are other popular site-targeted non-contextual advertising programmes. They are extremely popular with gambling, adult content and file uploading sites like rapidshare or megaupload. The reason that these programmes are popular lies in the flexibility and small entry-level requirements – an advertiser can choose to run his ad on your site, for just one day or maybe seven days and immediately calculate the conversion ratio. No bidding competitors and the ad is guaranteed to run on the blogger’s website. These programmes are particularly popular among small advertisers or who do not fit the Adwords Policies. Recommended.

So we have looked at advertising, now let’s examine some different approaches to make money from blogs.

Become an Affiliate – Companies like Amazon, ClickBank, Commission Junction offer affiliate programmes – the way they function is that you promote a product like a book or a software on your blog, your readers visit the merchant’s website and when they actually buy it – you get a commission ranging from 5% up to 50% of the sale proceedings. Remember, the ratio of a site visit converting into a product sale, is very low.

Donations – Don’t be surprised, you can actually make good money from Donations – There are a lot of “good people” on planet earth who are willing to share their fortune (maybe just 0.00001%) provided they enjoy reading your blog and probably benefit from the blog content. For example, if you wrote about some fuel saving tip and if it actually worked, people may be interested in sending you a token of appreciation via Paypal.

There’s one more option ‘Sell your Blog as a Brand’ - If you are a popular blogger and have a huge fan following, it’s time to capitalize on it. Start selling T-shirts, coffee mugs, handbags with your logo and your fans will actually buy them. CafePress is a popular choice here – When someone makes a purchase, Cafepress sends you a commission.

Or if you can write eBooks on your favourite subjects, Blogs can be a good selling place.