There are various ways to make money with a blog.
The most popular source is Google adsense. These are ads which are automatically displayed by Google. The advantage is that (usually) they display ads relevant to the content. The blogger then gets paid per click. (PPC). Therefore, the more traffic you get, the more clicks and revenue you get. A typical click through rate (CTR) is about 1-2%. This means out of a 100 visitors 1 or 2 may actually click on the ad.
The payment you get per click can vary alot. For some topics and niches advertisers are willing to pay a high price for advertising. For example, insurance, mortgages, online drugs e.t.c. However, for funny videos and poetry the return per click is likely to be low.
If you get enough traffic and have the right product you can end up getting a lot of money.
Note: Google take a high % of the advertising revenues.(about 50% I believe)
Selling Ads Privately
Another way for bloggers to make money is through selling ads directly to sponsors. This means there is no intermediary like Google to collect a %. You may also get a higher return because the advertiser can better target is ad.
Another way to make money is through using affiliate ads. These are usually linked to a product. If someone buys a product via your blog, then you get a % of the sale. The most popular affiliate program isAmazon, who may give upto 6% of a sale.
This is another way to make money. John Chow made popular a plugin called ‘Buy me a coffee’. I have it on My economics blog – buy me a coffee. But, to be honest it doesn’t make much money despite answering people’s economics questions.
For a new blogger, Google adsense is the most easy to use, this can soon give a regular monthly income. However, it requires a certain amount of traffic. Generally, the longer you have been blogging the more earning potential you will have. Income from affiliate deals again can provide a good monthly income, but, it requires having a suitable blog and enough traffic.