This is one statistic that you really need to know. You need to know where your conversions are coming from on a keyword level. Detailed knowledge on this will seriously reduce your advertising costs which into increases your overall profit. Google now provides a useful service from within your Adwords account called 'Analytics' which will provide with this vital information.
How to Improve ROI?
Conversion rates will need to be improved. This can be achieved by:
Traffic Quality - One of the major mistakes that new adword users make is bidding on to general a term. You need to narrow down your keywords. For example, instead of bidding on 'sports car' you may do better to try 'red convertible sports car'. If you can attract more targeted traffic you will have a better chance of converting them into actual sales.
Ad Copy - Try some simple split testing. Test the same ad, but with different headlines. Make sure you click the 'show ads equally' option within your account. This will be an ongoing process that will forces you to gradually write better performing ads.
Landing page - Do you have your own landing page?
If you are only direct linking to the merchants page then this will not apply to you, although landing page is something that you should be looking into. If you do have a landing page you will need to constantly monitor and update. Are people clicking through to your merchant? If not then work must be done on the landing page to remedy this. Try improving your page headline, write better reviews, make links stand out more etc. Maybe you could offer them something free? The point of a landing page is to pre-sell the product to them before they even get to your link!
Caiden Felix has sinced written about articles on various topics from Computers and The Internet, Marketing and The Internet. I hope you found this artcle useful. If your really serious about conquering Google Adwords then here is a site that may be of intrest to you...