Originally Posted by alpha_male

google adsense works like this

first the bot finds the keyword of your page= mostly the most repeated keyword (not including i am was of for etc). and secondly looks in meta tags and thirdly in title.

then it checks your PR.

then it sees how many page impression per day to your site( or how many visitors. more visitors the higher valued website ads on your site)

then it checks such and bigger site linking to you.

and then it looks for the visitors location and give ads accordingly (higher paying ads for US, uk and then australia, Eu, and lowest paying ads for iraq, afghanistan, north korea, etc)

and based upon this google bot give your page a ranking between 1-10 and selects sponsers (also having a rating between 1-10) of the same rating and highest paying sponser in that rating first and then the 2nd and 3rd based on average cost per click.
1 is the lowest paying sponser and 10 is the highest.