1) Never Fly Blind...

In over five years developing AdWords campaigns, we've never seen a profitable example that didn't track conversions.

AdWords Conversion Tracking is simple to install and a "must" for measuring ad performance. Remember, by itself the Click-Through-Rate (CTR) of an ad tells you nothing about the ROI it's delivering. We've seen many examples of ads with a lower CTR, but higher conversion rate.

Google Analytics obviously adds a great deal more data, but takes time to master. However, one feature worth using immediately is its ability to tell you which ad position yields the best results.

Finally, don't forget the AdWords Reports section. This has improved significantly over the past year, and the Search Query Performance report is a real asset in optimising keywords and ad copy.

2) Cut out the Middle Man...

In this case, the "middle man" is Google. When developing and testing your ads, it's vital to put yourself in control as far as possible:

Delivery Method: By default, Google spreads the delivery of your ads evenly throughout the day, ensuring you don't exhaust your daily budget (and they get to spend as much of it as possible). However, it also serves to mask the true demand for your product or service. We have seen many cases where ads are more profitable at certain times of the day. If you have a limited budget, spend it when you'll get the best return. We recommend running campaigns using Accelerated delivery. Keep an eye on your daily budget and adjust accordingly.

Ad Serving: If you're running multiple ads, Google will automatically start favouring the one with the highest CTR once a certain volume of clicks have been received. We never use the default Optimise option, and recommend you select Rotate for ad serving.

We have AdWords campaigns for some of our clients that have been running for over three years, but we always maintain at least two ad variations per ad group. Even if there's only a single word difference, one ad will ultimately prove superior and deliver an improved ROI.

The Rotate option also gives you more granularity when testing ad variations. Say you want to do a 1/3-2/3 split; you simply create two copies of ad "A" and one of ad "B". Using the same principal allows you to create 60/40 and 70/30 splits, which are very useful in some circumstances.

Network Options: Start your testing using Google's Search network only. Uncheck both their Partner and Content networks. Once you have some solid data from mainstream search traffic, you can add their Partners. Google's partners are a pretty "mixed bag", and you may decide to exclude them altogether (we often do).

Finally, enable the Content network and Content Bids. Never run on the Content network with the same bid as Search - you're just handing Google money. By default, we set Content Bids at 1/10 of that on the Search network: so if your Search bid is 0.50p, set your Content bid to 0.05p for openers.

If you find your product or service has "traction" on the Content network (true in about 25% of cases in our experience), it may be worth running separate campaigns for Content searches.

All these options can be set from the Campaign Management tab in your account. Select a campaign and click the Edit Settings button.

3) A Stitch in Time...

It's important to optimise your ads (and separately your keywords and bids) to a fixed schedule. By default, we run a three-month cycle: Every three hours for the first day. Every day for the first week. Every week for the first month. Every second week for the second month. At the end of the third month.

You can adapt this schedule to suit your click volume, but make sure you have a schedule and stick to it. You'll learn more about your target audience, and employ your time more efficiently. Don't forget to take weekdays, weekends and seasonal trends into account.

4) Study your Competition First...

Before writing your first ad, take time to study your competition using a selection of core keywords and phrases.

This is particularly important if you're thinking of using Google's Keyword Insertion feature. This is becoming increasingly popular and can be counter-productive; making your headline look identical to the competition.

5) All for One and One for All...

Achieving a good Quality Score, and providing visitors with a rewarding experience, means treating your keywords, ads and landing page as a single unit.

Ensure your most popular keywords appear in your ad's headline and copy. If you cannot accommodate core keywords in your ads, segment your ad groups further.

Make sure core keywords follow-through to your meta data and landing page copy. Try to write ad copy that flows naturally and qualifies visitors to your site. If you sell software for Microsoft Outlook, for example, a headline such as "Using Microsoft Outlook?" will help avoid Apple users, who might find your product of interest, but are unlikely to become customers.

6) Simplicity Sells Harder...

Capitalise letters and words in your ad copy for emphasis (not all the time). Capitalising the first letter of every word in your copy actually makes reading more difficult.

Be honest and don't use words like "free" unless you're really giving something away for free within 3 clicks of your landing page.

7) Understand what Matters...

According to research undertaken by Google in 2005, the headline of your ad represents 40% of its impact. The first line of copy accounts for 25%, the second line 20% and the Display URL 15%.

AdWords' power comes from the ability it gives you to intercept prospects at the exact moment they're looking for what you sell. The basic PPC ad format is simple, and works best with a single clear message and a strong call to action.