1. Find A Product
2. Keyword Research
3. Ad Copy
4. Bidding Strategies
5. Tracking & Testing

Let's explore these steps in detail below:

1.) Find a Product:

If you don't have your own product a fast way to get started is to join an affiliate network such as cj.com, clickbank.com or linkshare.com. There are thousands of great products at these networks. They are easy and free to join. You don't need a website to start however it is a good idea to invest in a website once you find a lucrative market. You can also join thousands of companies who run their affiliate programs in-house. To find these companies type in a product you would like to advertise and follow it with affiliate program. E.g. "guitar lessons affiliate program".

2.) Keyword Research:

Brain storm search terms that people would use to find your market. Use general and specific keywords. General keyword e.g. "guitar lessons" "learn the guitar". Specific keyword e.g. "guitar made easy" "ebook guitar lessons". Check your competitors' website source code and look at their meta tags to see what keywords they are using. Use keyword tools like Word tracker, Overture's free tool and Google's free tool. These will help you uncover hundreds or even thousands of keyword phrases and combinations.

3.) Ad Copy:

Writing good ad copy is crucial for getting visitors from Adwords. Focus on the benefits of the product you are selling and use the keyword in the title of your ad. If a web surfer typed the keyword "guitar made easy" you could write an ad like this:

Guitar Made Easy
Learn Insider Techniques to
Master the Guitar Fast.
http://www.your-guitar-store.com

The keyword is in the title and the benefits are in the ad body.

4.) Bidding Strategies:

If you have a small budget keep your bids low between 10 and 25 cents per click. Bid on as many keywords as you can. Don't get into bidding wars with your competitor for 1st place or any ranking. Figure out what a visitor is worth to you. If you have 4 sales for every 100 visitors and you make $20 per sale, a visitor would be worth $0.80.

This is how I calculate the visitors worth: 4 sales x $20 / 100 visitors. Once you know what a visitor is worth you will know how much your maximum bid should be. To obtain a healthy ROI never bid more than half of what a visitor is worth on a search term. Using our example above a visitor is worth $0.80 so you would keep bids below $0.40 because you want to try to make a 200% ROI.

5.) Testing And Tracking

Experiment with your ads. Split test 2 ads in your Adwords account. Keep the ad that performs the best and edit or rewrite the loser and split test again. Look at your Adwords stats to make note of the best performing ads. This will teach you what types of ads work best for your market. Test variations of your landing page. Modify your page and track your results. You should constantly be testing and tracking your website content and your ads.

Google has a conversion tool to help track specific goals like your ROI and your click thru rate to your website links. Google has an excellent tool called Google Analytics that tracks traffic,goals, ROI, keywords and much more. It is the best free tracking tool I have ever worked with.