1) Keyword research - keywords are at the heart of your campaign so its important to make sure you use the right ones. Include long tail i.e. 3, 4, 5 word variations of your core keywords/phrases as they are usually cheaper and more targeted. Use Adwords keyword tool to find the keywords but also look at competitors sites and use your own common sense. The Permutator is a great tool for building keyword lists.
2) Conversion tracking - where most people go wrong. Make sure you have conversion tracking enabled so you know what keywords produce conversions (sale/lead/download etc) and at what price. This will tell you what your most important keywords and ad copy are and will form the basis of most of your campaign tweaks.
3) Experiment - Run 2 or 3 different ads for the same keywords. You will learn which Ads produce the best results. Also dont be afraid to try new/unusual keywords/tactics. Trying an approach that no one else is may produce more profitable results.
4) Think outside the box - you might know your product as 'widget' but your customers may look for your widget by searching for 'cool gadget'.
5) Use Google Analytics - its phenomenally useful and will provide alot of information which will help you tweak your campaign e.g. what time of the day has the highest conversion rate?
6) Dont bid too high - Theres no point bidding at £2 per click if your budget is £10 per day. Try and work out the best bid prices which will get you the most amount of traffic per your budget e.g. can you get £10 worth of traffic per day by bidding at 50p and get 20 clicks - instead of bidding at £1 and getting 10 clicks.
7) Position really isnt that important - similar to the above - dont get hung up on being in 1st position as 6th position can be x10 cheaper and therefore cost per conversion x10 better.
8) Set conversion benchmarks - work out what your cost per conversion needs to be e.g. if it needs to be £20 make sure you reduce cpc's on keywords that are converting at £21+.
9) Test all keyword matching options: broad "phrase" and [exact] as they can all perform very differently in terms of CTR, cost and conversion. Also make sure you use negative keywords to prevent Google displaying your ad for irrelevant keyword searches e.g. if your keyword is 'top hat' make sure you add 'repair' as a negative keyword if you dont want your ad to be displayed for 'repair top hat'.
10) Make sure you try both Googles search & content network (set as the default) and measure the effectiveness of both as often one can outperform the other. Also you can set different bid amounts for both and you will usually need to do this as the 2 networks often produce very different results. Dont write off the content network too early as it can often produce brilliant results.
11) Ok heres an extra - make sure you analyse all your stats and benchmarks so that your strategy and budget dont get lost in all the data. Top things to consider using Analytics, Adwords campaign data/conversion info and your common sense....
* Can you see what variables are affecting your conversion rate
* How can you get your cost per conversion down
* What keywords produce conversions (and dont)
* What keywords produce good length of stay on the site (and dont)
* Can you see any time trends i.e. morning is more productive than evening, weekends not productive etc
* Get rid of the badly performing keywords and allocate their budget for the better ones
Hope all that helps and not confuses people