This is a PPC ( Pay Per Click ) system. You only pay for advertising when an interested person sees your AdWords ad and clicks on it. The amount you pay per click is dependent on many factors.

Some of the factors that go toward deciding the price per click are:

1. The amount of competition bidding on that keyword.

2. The site value that Google may give your site.

3. The amount of clicks on your ad itself compared to the amount of exposures your ad receives (CTR),

Even though a keyword may start at a high price per click, its popularity will bring the price down. Popularity is the result of people using Google to search a term or phrase and choosing your ad. As your Click Thru Rate (CTR) rises you will see the price per click go down. I've had keywords start at over one dollar and fall to about five cents a click.

Some tips to lift your your CTR and thus lower your PPC (Price Per Click) are:

1. Use the keywords that you are bidding on heavily in your ad.

This will make the keywords in your ad show in bold and stand out when someone does a search on Google using your keyword.

2. Encasing your keywords in [square brackets} or the use of "talking marks" will ensure your ad relates to what is being searched. Without the [square brackets} or "talking marks" around your keywords, your keywords will cover a larger unrelated area giving your ads more exposure but less clicks. This will force down your CTR (Click Thur Rate) and force your price per click up. Not a good thing.

3. The use of negative keywords. Negative keywords really bugged me because I read all about them and their use but didn't know what they were, the articles never actually explained what or how to make them. Just that it was the thing to do.

Negative keywords: if you were looking for people searching for the keyword "pink" but don't want people who are searching for "light pink" then you would ad the negative keyword -light to your list of AdWords keywords the same way as you add the keywords you are bidding on.

Did you notice the minus sign (-) next to the keyword above? Here it is again, -light. You put in as many negative words as you can think of to narrow down searchers to the ones you want.

4. With AdWords you can go locally or globally. You can limit your ad to only viewers in a particular city, state or country. If you live in New York City selling meat pies, then you may not want to sell them to china. Limiting your ad to a specific location, country and language will increase the likely-hood of great targeted traffic clicking your ad and bringing the average price of your clicks down.

With AdWords your aim is to get highly targeted cheap traffic to your website and to make sure you are profiting from the use of AdWords. To see if you are profiting you have to answer these questions:

A. How many clicks does it take to get one sale?

B. How much do I profit from one sale? Read on: