1. Make sure you’re using Analytics correctly.  The main priorities are as follows:

    Check our previous post on Setting up Analytics for guidance & resources.

  2. Manage your bids based on your return on investment*.
  3. Choose your bidding strategy
  4. Take the time to understand your results and take careful and timely action.
  5. Test and refine your keyword list, advert copy, landing pages.
  6. Give each campaign, ad group, advert, keyword and landing page enough time to prove itself.
  7. Spend your time wisely

*How do you work out how much you can afford for each click

Your break-even cost per click is :

Conversion Rate x Profit

E.g. Conversion rate of 14% and a profit per sale of £15
You have a maximum of £2.10 per click to spend to break even.

If you don’t actually sell online, you can still attach a rough figure to this.
Work out how much each lead you gain from your website is worth and use that to determine how much you should be spending on your pay-per-click.

If you know that you can convert 10% of your website leads for an average transaction profit of £500, you can work out your break-even point as follows:

Break-even point = website conversion rate x 10% x £500

For a keyword that achieves a visitor-to-lead conversion rate of 2%, and you have an average profit of £500 per transaction, your break-even point will be:
2% x 10% x £500 = £1 per click

i.e. you will be in profit if you have an overall average cost per click less than £1.

But make sure you take the cost of your time (or agency management time) into account.