To do or not to do?
The Adsense program has an onsite advertiser signup feature which lets prospective advertisers signup to show ads via Adsense on your site. This happens when the advertiser clicks on the 'Advertise On This Site' link and completes the steps on the Adsense site. This feature can be turned off or on from your Google Adsense control panel. In the control panel, you will have an option called 'Onsite Advertiser Sign-Up' where you can decide whether you want this feature enabled or disabled. Changing the preference here does not have an immediate effect and may take upto 1-2 days to reflect on the ads. You do not need to change the ad code at all.
This article deals with whether you should enable this feature or not. As with most other things with web development and monetization, this entirely depends on your site. When an advertiser signs up via your site, he agrees to advertise on a CPM basis. That means, the advertiser pays for every 1000 impressions of his ad on your site.
This setup normally works well for sites that have a large traffic and where most of the traffic is repeat visitors. Usually this kind of site (eg forums) have a low click through rate(CTR) and a CPM setup suits ust fine.
But if you have alow traffic website or have a site in a niche category, it may be better to disable the advertiser sign up feature and go for a traditional CPC setup itself. This is because, you may want to try your luck getting a 50c click among 500 ad impressions rather than waiting for 1000 impressions to pay 40c!