Personally, I think online ads are mostly a waste of money unless you get a good, measurable conversion from those ads.
Using Adsense for mostly branding or signing up free users is, in my opinion, the wrong approach since everyone is doing it. It ends up a war of attrition with who has the bigger budget, with the only winner being Google.
That's not to say you can't do very interesting things with online ads from a branding perspective. I've used online ads to great effect to create notoriety, the ad units themselves didn't increase traffic, it was the word of mouth associated with what I was doing with them.
Last year when I was spearheading the campaign to get Rick Astley the Best Act Ever award at MTV's Europe Music Awards, a bit of a rivalry occurred between the Tokio Hotel fans and the Rick Astley fans - I used this to my advantage.
Essentially, I leveraged Google's Adsense to plaster simple flashing (annoying) "Vote 4 Rick" ads all over other fansites around october 20th when the site's traffic was flat.
Post's below contain screenshots that blog readers were sending in of ads in action.
http://www.bestactever.com/2008/10/20/please-stand-by/
http://www.bestactever.com/2008/10/23/this-oozes-irony/
All up, I think the ad spend over a 10 day period was about $20 .. it was around that, I don't remember it costing me too much.
You can see the traffic increase to the site as people became interested again with what was occurring and telling their friends of the pranks that were happening.
http://files.marklancaster.org/images/bestactever_traffic_oc...
In one case, I managed to embed a rickrolling flash ad in a certain Tokio Hotel Fansite, belonging to a critic of our efforts. She got so angry that she actually disabled advertising for her site so that I couldn't get ads in there.
http://www.bestactever.com/2008/10/26/unappreciated-gift/
I also started targeting certain fansites directly, specifically one fan fiction site because they used Project Wonderful and the Ad unit was relatively cheap.
This is the message that the admin of that fansite sent to me via project wonderful. I found it to be highly amusing and this is the first time that I have made this public. I literally had every ad spot on their site filled with a flashing "Vote 4 Rick" ad which cost me the minimum $5 for project Wonderful and lasted about 4 days.
Hello Mark Lancaster,
Darcy Gilmore has sent you a new message! The message is:
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Subject: Your Ad on our TH Site
I love that you're advertising on our site, it's ingenious! Keep up
the hilarious work, it's making all of our douchebag members foam at
the mouth, and nothing pleases me more than that.