It's hidden on the page that you write the post on, on the right-hand side, waaaay over there. It's an area I never looked at, even though I have been blogging for years and do so every day. I would have never seen it, except that I am very stubborn and it's a quiet Sunday morning. No, I have no idea why they make this so obscure. I'm sure that Google wants you to do this!
Once you find it (go ahead and open a new window and start writing a post), click on Advertise products. That will open up a place to allow you to search. You have to type in whatever product you will like to advertise and choose from the list. On this blog post I will choose dog food, just because it strikes me as funny, but you will want to choose something that relates to what you are writing about.
Experiment with it a little. That's what I'm doing this morning. You can choose different formats, and ad sizes. Again, I don't know why they make this so difficult, but they do! Now go get rich!