Stavanger of Blogcrowd Forum sent me an email alerting me to a post he did on how to incorporate AdSense Ads in your New Blogger (formerly beta) blog post. It involves some slight modification of the AdSense script, and I expressed my reservation regarding violation to AdSense TOS. However, Stavanger, wrote to AdSense Help Center, and received some vague replies that seem to indicate that slight modification of the code for the New Blogger is OK. I paste here the email he received:
You are permitted to make minor edits in Blogger Beta. However, please keep in mind that in general publishers are not allowed to alter the AdSense ad code for any reason. Once you've generated the ad code in your AdSense account pages, you may not alter any portion of the code or manually change the layout of the ads.
Thanks for your understanding.
The Google AdSense Team"
Having received some kind of reassurance, I proceeded to test his hack in this blog: Good Parenting Practices and it worked. You can see AdSense ads (half banner) at the bottom of the first 2 post as I already have 1 skyscraper in the sidebar. Theoretically, there should be ads in the remaining posts, but they are suppressed by AdSense, so there are only the maximum 3 ad units in the main page.
If you want to see an example of a New Blogger blog with AdSense incorporated into the top of the post, look at this blog Recreation and Sport.
If you want to do it, check out his post Insert Google Adsense Into Blogger XML Post Body
This is how it is done. You generate the AdSense script from AdSense site, then replace HTML characters like < with etc. You can read more about it at Google AdSense In Blogger Beta XML Update. You can actually parse the script in Notepad using Replace All, but Stavanger has even made it convenient for you by giving a parser at Parse Google AdSense For XML Blogger:.
Update 28 April 2007: This update should have been made earlier, but I only recently review the post when I got a query from a blog reader. And alternative to replacing < with , etc, is to remove the comment tags and from the AdSense script. I have written to AdSense Help, but if my memory is OK, they did not reply. I also posted in a pinned message in the Google AdSense Help group and added to the subject "It is not OK. Will AdSense allow it" but found that the message was deleted and the subject was changed back to the original title.
Update 8 June 2007: I got a query from a reader in the comment and thought I would paste the reply to the comment here for general reading for everyone:
AdSense allows max 3 ad units, and if you have more than 3 posts in the main page plus an ad unit in the sidebar and an ad unit in the footer, you will get 3 ad units displayed in the main page. The rest of the posts will have the ad suppressed, and the ad in the sidebar and the footer wouldn't display either.
However, in the individual post page (only one post) the ad in the post plus the ad in the sidebar and the footer will be displayed.
The last time I implemented something like this, I contacted Adsense Support and they replied that it is OK for THAT blog, but didn't say anything about other blogs, so it is left hanging whether we can just implement it and leave AdSense to suppress additional ads or we have to get their permission each time we implement it. Anyway, you can either protect yourself by limiting the number of posts displayed on your main page, use this is at your own risk or verify with Adsense Support.
Update 22 2007: Actually new about this new feature in New Blogger sometime ago, but was reminded by an email from AdSense so I went ahead and tested it out. You can read about it at AdSense between posts direct from Blogger Layout (click BACK button to get back to this page).