Contextual Advertising enables advertisers to display advertisements that closely match with the text of the content on your Web site or blog. The most famous of these is Google's AdSense program. Success with AdSense is not guaranteed and it is advisable to experiment other ad networks also to determine which one works best for you.
Some of the contextual advertising ad networks are as follows:
Google Adsense:
http://adsense.google.com
Yahoo Publisher Network:
http://publisher.yahoo.com
Clicksor:
http://www.clicksor.com
Adsonar:
http://quigo.com
Contextual advertising is useful when your blog is primarily an information only blog. If you are promoting a specific product or a range of products, you will need to be careful with contextual advertising as there might be links to competitor advertisements.
This may be detrimental to sales of your own products. Some of the ad networks like AdSense will also allow you some amount of control in blocking out competitor ads.