When used properly the Google AdWords system can resemble a very nice investment account. You give it $100 and it returns $250 in sales or prospect lead value. Take out your costs and you have a healthy return left over. Add to this the ability to complete this transaction on a daily basis and the overall annual percentage return makes it look on the edge of legal.

Unfortunately, not everyone has this same experience. Some people spend $100 and the story ends there. No sales, no prospects – just the chance to spend the same amount the next day.

And while I applaud the US$16 billion plus that Google booked in revenue for 2007, I also want more for the average advertiser who makes up the bulk of this result.

So, here are my seven steps to follow to ensure that your experience with Google AdWords resembles the investment account I mentioned before rather than the bottomless pit it may look like already.

But first a primer on the basics of AdWords.

The home of the Google AdWords system is the area of the search results that is headed up ’Sponsored Links’ and which sits on the right-hand side and occasionally on the top of your search results screen. (AdWords ads can also be seen live on web pages – more on this in a later article.)

‘Nobody clicks on those things’ is the response I usually get when I point them out to any new online marketer. Well, US$16.59 billion bets they do. Google tells us that 99% of their revenue comes from advertising – AdWords makes up a lion’s share of this. So someone is clicking somewhere.

The act of clicking your ad is quite important. You see, as an AdWords advertiser you are only charged when it is clicked – not when it is shown. This is one of the points that appeals to advertisers – only paying for traffic that decides to visit their web pages.

Your AdWords ad allows you just four lines of text to tell your story: a headline (25 characters), two description lines (35 characters), and a display URL (35 characters).

The online advertising management system you receive when you set up your AdWords account lets you set up each ad so that it is triggered by search keywords or key phrases.

This leaves you to determine what geographic region you want to target (country, city and even suburb, depending on the region you are targeting) and how much you want to spend per click and as an aggregate total value per month for your campaign. Then you are done.

That’s the barest minimum of the basics I have room to cover here, so let‘s move on to the five steps I want to share on how to master the system.

Step 1: Know where your dollars are going before you start spending them

No surprises that this is No 1 for anyone who has read any of my recent articles. Just a few minutes spent setting up your website analytics to accept AdWords traffic will tell you which keywords are performing for you and can save you days of unnecessarily spending (for some this is $100s, for others $1000s) on keywords that are just not performing. Your tracking must show you statistics at a keyword level. You will find that a lot are duds and others are just barely paying their way, leaving a few gems for you to nurture to financial success.

Step 2: Let your ad follow the intent of your searcher

As I have mentioned before, your ad is shown when people type in the keywords that you bid on. These searchers are on a quest for information – the copy in your ad should follow on from what they started with your keyword. Once your whole campaign has run for a week or so you will start to see which keywords are attracting the most searchers and therefore which require specific ads to help carry on the searcher’s train of thought.

Step 3: Allow your landing page to continue the story started with your ad

The web page you take your prospect to after they have clicked on your AdWords ad is called your landing page. It makes sense to take your searcher to a landing page that continues the story they started with their search term rather than hoping they will find their own way from your home page.

Remember, you already know the keyword or keyword phrase these people are searching with. Use this information to take them to the exact landing page on your site that best matches that term.

Step 4: Test each step of the way

For each AdWords ad you write, Google allows you to have another by its side. These two (or more) ads can now be set up to share the traffic the keyword generates. This can be either as an even split or to favour the better performing ad. It always pays to write a minimum of two ads to see which one hits the spot. As you progress you will start to see what types of words and emphasis your ad copy needs to help you maximise both your click-through rate and, more importantly, your conversion rate.

Step 5: Set and forget at your peril

A Google AdWords campaign is not something that once set up can run on unattended for ever. It needs regular tuning to get the most from your investment.

As other advertisers jump onto the system your bid prices will need to increase – otherwise your ads may move down and even off the first search results page. (Have you visited page 2 of Google recently?)

Plus, the results in the organic area (the main results area that is free) change on what seems to be a weekly basis. What may have been missing in this area – causing people to look right and click in the sponsored zone – could well now be there, resulting in falling click rates.

A few hours of AdWords attention per month is all it needs. Something either to ad to your list of online marketing tasks or to subcontract out to our team.

So there you have it – a few steps to take that will get you a bit closer to owning a Google AdWords campaign that resembles a very lucrative ATM, which delivers more money than you put in, rather than a bottomless pit that swallows all you give it.