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CROSS POSTED FROM http://www.dedestruct.com/google-adsense-targeting-for-relevant-ads/2007/07/

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If the ads served up by Google Adsense on your blog/website arent relevant to your content its usually because other content on the page is throwing off the density and Adsense cannot decide whats most relevant on the page.

To fix this you can use Google Section Targeting with the use of <!– google_ad_section_start –> and <!- -google_ad_section_end –> to tell Adsense what content to consider for relevant ads.

You can manually add this into your template, but plugins are easier to manage so here is the Google AdSense Targeting plugin from Il Filosofo. It automatically adds the tags around your post content and templates.

Some Handy Tips

via Tech Addict
1. Don’t cheat Google by targetting wrong content (doing so will result in Google banning).
2. Always include user comments in the Tags.

3. If you do not see results quickly, give it few days for the adsense bot to crawl your blog.
4. If your Google earnings drop for the first few days, experiment for some time. 
5. Always include the Title of post within the tags.