The placement of the ad on your website has a huge impact on click through rate and thus earnings. If you place ads somewhere where no visitors go you will not earn much from it. I will not tell you which ad placement performs best on your website because I honestly do not know. I could make some guesses based on my own experience but to be sure you have to test it on your website.
I will only investigate ads that are placed somewhere in and around the content of your website which excludes menus, sidebars, headers and footers from this article. The main focus will be on cash per click ads and there on Google Adsense but most is applicable for all other cpc advertisers as well.
The normal content layout of a blog begins with the title of the article, below that some information about the article (author, tags, date), then the article and finally a way to add comments to it. The most obvious and easiest way to place ads in this content is to add them to the top or bottom above or below the article. (examples taken from Raymond.cc)

This has some serious disadvantages. The ads stick out this way which means that they look like ads which in turn has the result that many visitors skip them to go straight to the content. The click through rate is not bad normally but it could be better. The same can be said for ads below the content which are getting skipped regularly as well.
An ad that is exposed will get skipped more often than one that is not exposed
Instead of exposing the ad you could integrate it into the content. This solution has the advantage that the ad cannot be skipped that easily because it is near the content. Ads placed in this context do get a higher click through rate than ads placed outside the content.

The easiest way to place the ad in the content is to make the content float around it so to speak. The html code would look like this:
This would place the ad on the top left position of your content and align the content, that is the text, to the right side next to the ad. The margin-top and margin-right parameters define the margin of the ad from the top (the title) and right (the text).
You could make the ad float on the right instead by simply changing float:left; to float:right;
This (the left floating ad) is actually the most common ad position on blogs that are well monetized. Just take a look around and see what I mean.
Ads placed next to the content generate more clicks and thus revenue because they can’t be skipped that easily
Some advanced techniques
behind the div tag of the ad.
Do you have additional ad placement tips ? Let me hear them !
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