Is it possible to make money on your AdSense ads by bringing in traffic with AdWords? Think of it, you are bidding on the words that are very similar (if not exact) to the words you are getting paid for. So if a word like, "web design" costs $1.00 per click in AdWords and you as an AdSense publisher gets paid $0.60 per click, then how can you make money?
Jenstar, in a thread at Search Engine Watch forums says:
Mis-spellings and multiple keyword phrases are key in the "in with Adwords, out with AdSense" strategy. You aren't going to be making any money by bidding on the big money keywords, and very rarely by bidding on anything much higher than minimum bids.. unless you are getting them to exit with big money AdSense ads.
Jenstar goes on to explain that only "careful optimization for AdSense as well as constant babysitting" will make for a positive ROI on the "In with Adwords, Out with AdSense" strategy. At first, she recommends to bid the absolute minimum and then increase your AdWords bids slowly. Fine tune, track, fine tune, track and repeat.
Oh, and if you thought its against the AdSense TOS of use AdWords to drive people to AdSense ads, then you are wrong. That to was covered in the thread and is now clearly known to be accepted by Google.