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Have you heard of Google Adwords? Probably you are already a little familiar with the Internet’s most powerful tool for promoting your business to the largest community of Internet users in the world. There is no bigger opportunity to reach out to customers all over the Internet than Google and its search partners. Using Adwords effectively can make your site pay for itself and earn you huge profits, but if you don’t really know what Google Adwords is and how it works, you may waste your ad money on subpar results.

Before you begin creating ads for your Google Adwords account, you first need to get inside your potential customers’ heads. You need to know what they are searching for. You need to know what they need to know.

One way to understand what drives customers to your site is basic keyword research. Look at the keywords that are already on your site. Do some additional basic keyword research with tools like WordTracker and Keyword Discovery. Don’t limit yourself to the high KEI keywords you get from WordTracker or Keyword Discovery. Once you use the keyword search services, do some brainstorming to think of additional words and phrases that potential customers may be searching for that will lead them to content that your site can deliver. Make your list as long as you can. You can whittle it down as you get your campaign underway. Eventually you will have a few high-performing gems that bring you the highest Click Thru Rates (CTR) and conversions.

Next, create and fund your Adwords account. At this point you can begin choosing a smaller list of keywords from your master list for your first Adwords campaign. You will choose that shorter list of no more than 20 keywords and then write your first ad. Write an ad you think will motivate clicks, and then write a second ad with a slightly different wording. This process is called split testing. Comparing ads through split testing will help you find exactly the right wording to attract customers. You will find combinations of keywords and ad text that work optimally to drive traffic to your site. Over and over, you will make small changes that lead to better click thrus and conversions.

If there’s a basic rule for Adwords survival, it’s setting your advertising budgets low until you have completed your Adwords testing. Sometimes just $100 a week will get you the data you need to make your site truly profitable. Other times, it takes a lot more than $100 a week to test ads for a broader niche. Either way, always check your returns against your investment. Adwords allows you to do this by inserting values for goals, such as a sale of a product. You will measure conversions to compute whether you have made your money back and by how much.

Always aim to make at least 50% return on your investment. A 50% return will ensure a profitable campaign that allows you to fund expansion of your site and gives you some profits to pocket. Paying attention to CTR and conversion rates makes it possible for you to grow your site from the sales you make with Adwords.

Justin Harrison is a leading Internet Marketing consultant responsible for the Internet Marketing strategies behind some of the biggest online brands including Amazon, BBC, MasterCard and many others.