The first thing you need to be doing is targeting the proper audience. Try to make your ads as exclusive as you can, right down to the language they're written in, to appeal to the type of customer you're looking for.

You also need to refine your keyword list as much as possible. One helpful technique for refining is to use exact match keywords. You do this by placing square brackets around your keyword phrase - [keyword phrase]. This tells Google to only display your ad if someone searches for that exact phrase.

If it does not appear word for word then your ad does not show up. This way you prevent having to pay a lot of money in commissions for mere browsers to your website. You only want targeted traffic at your site.

When you are doing advertisement testing, test many ads at the same time, thereby performing a 'split test'. You are finding out which one of your ads is giving you the greatest clickthrough percentage or number of instances. Once you have it pegged, you replace the other ads that you pitted it against with ones that are more like your best producer.

Once your clickthrough is at an acceptable level, you also need to be sure you're tracking your return on investment (ROI). Adwords doesn't have the ability to do this in itself, but it can when you add Google Analytics to the mix.

Analytics will let you track conversions from specific ad groups so you can see which groups are profitable, not just getting clicked.

When you write your ads, you should include your keywords in the title and description. When a keyword is in the ad itself, Google highlights it in the results, which can make your ad stand out from the pack.