I have long advocated a minimalist approach to blog monetization. With all the options available it's critical that as bloggers we work on targeting our audience with a laser rather than a shotgun. I find myself moving around from site to site and it appears at some point every beginning blogger in the world got around a table and decided that the best way to monetize their site would be to fit as many advertisements onto one page as possible while your posts snake carefully around even more advertisements.
There are a number of tools available for Wordpress that will allow you to get control of your advertising real estate which I will discuss in a bit, but before I continue. Let me just re-state a point I make often. The best tool you have as a blogger to monetize your site is your good name, authority and your superior content. When a reader lands in a site where the tone is professional the author is well versed in the subject matter and the content fulfills their needs I guarantee you they will return to your site. With advertising, the quality of your content will decide how much soap you sell from your box. I find even when I'm surfing sites myself I'm far more likely to click an advertisement or affiliate link on a site I know and trust.
OK content sermonizing over for now.
Broadly speaking there are 3 ways to make money with your Wordpress blog:
Advertising Affilliate marketing Paid posting
Advertising is the easiest method to monetize your word press site. Even a brand new site will more likely than not be approved for a Google Adsense account. Adsense pays for every user who clicks on an ad on your site. I suggest you make getting an Adsense account your first To-do item. Once you have your Adsense Account download an Adsense plugin for Wordpress. I use Adsenser which is an easily configurable Adsense manager. Managers like this will typically allow you to insert ads into your posts and feeds and as widgets in your side bars. Adsense on a high traffic site will typically be the biggest earner. On smaller or niche sites it may be a better idea to build the content on your site and apply with one of the smaller company's that deal with your niche, these companies typically pay per 1000 impressions. This means the advertiser pays based on how many times their advertisement is displayed not how many times it's clicked on. This model is very effective on niche sites that see low volumes of users but where the users navigate the site extensively. Finally when your site has built a healthy audience you will be in a position to approach companies in your niche and rent them advertising space. Typically this is the most lucrative of the advertising methods but not really an option until your site has a Google page ranking above 4.
Affiliate marketing is a method of selling a product on behalf of someone else for commission. Commission is typically earned for a sale of the product or when a customer fills in a form or completes some other goal stipulated by the advertiser. Affiliate marketing has huge earning potential and done well it will outstrip your advertising revenue by some way. In order to do this though you will need to find a product that is of a good quality and fits in with the topic of your blog. Then you need to write top quality sales copy which will let you sit back and count all the money you're making. Affiliate marketing takes hard work and lots of time to do well if you do it right though it can provide a very good stream of income.
Paid posting was very popular a few years ago but its popularity has waned somewhat of late. Paid posting is generally offered by groups who represent clients willing to pay to get their product out to a certain target market. Bloggers will then typically be selected or given a chance to apply for an opportunity to write blog posts on the chosen topic and will then get paid for the post. Bloggers have tended to steer clear of paid posting of late as it can alienate your readership. My opinion is, again in moderation and done correctly, paid posting will not cause the downfall of your blog. The key is to be honest with your reader, tell them upfront that your post is paid for many pay per post networks insist you do this anyway. Make sure you select topics that fit the theme of your blog. Add value in your post, make it relevant to your readership. Finally try and manage the number of paid posts on your site 5 posts for every 1 paid post is a pretty good ratio that won't annoy your readers too much. Perhaps you would want to set aside a specific day a week for paid posts so that your readers who are not interested in your paid posts have advanced warning.
With the plethora of widgets plug-ins and page tools available Wordpress has everything you'll need to implement these monetization strategies. The important thing is to take your time and plan your strategy and go and find the tools that support it rather than letting the tools you find dictate your strategy.