Managing Google AdWords campaigns is easy, right? You just pick a bunch of keywords, establish budgets, enter your credit card and you're done.

Sure, but you're probably on your way to helping Google maintain its stock price while wasting a lot of your own money heedlessly or losing out to more savvy competitors.

Executed well, AdWords (and other similar "pay per click," or PPC, campaigns) can effectively drive qualified traffic to your website–which in turn can generate new leads and sales for your business. The best-run campaigns have a clear strategic directive, established benchmark metrics, and analytics in place to measure everything.

But the key phrase there is "executed well." What my company often sees instead, when we're called in to audit or take over these DIY campaigns, is a whole lot of aimless setup, general mismanagement and under-utilization of features that could otherwise help overall performance.

If you're managing your own PPC campaign in-house, make sure you understand these essential rules.

1. DO Understand How Your Ads Get Shown

There are multiple factors influencing how your ads appear on Google:  your daily budget, your maximum cost per click (or "CPC") per keyword, your competitors' max CPC on the same keyword, how popular your search phrase is, and Google's Quality Score. If you don't understand how Quality Score works, get familiar with it pronto!

2. DON'T Send All Users to Your Home Page

You need to think about your PPC campaign as a direct-response experience. If your ad succeeds in getting users to click, why dump them onto a home page without telling them where to go next?

Instead, steer them more clearly into the response you want by creating a unique "landing page." Google has deemed these pages so important that it has implemented "Landing Page Experience" into its Quality Score rating.

3. DON'T Rely on Broad or Generic Keywords

Search engine users have gotten savvy over the years; many search queries now tend to be a few words long, rather than just single words or pairs. Bidding on very broad or generic keyword phrases is likely to be expensive–because of either the bid price itself or by dint of sheer search volume–and the traffic yielded may be lower in quality.

Unless you monitor these terms closely for performance, they can wind up generating negative ROI.

4. DO Organize Keywords Into Tightly Themed Ad Groups

There are many benefits to having relevant keywords organized within their own ad group:

  • Keywords can easily be used in your ad copy since they are relevant to the ad group.
  • When the ads are more relevant to the audience, your click-through rate (CTR) will increase (and that is the goal, after all)
  • Higher CTRs help your Quality Score, which in turn will lead to lower click costs for the same position.

5. DO Utilize All Match Type Options

Match Type settings for each keyword help control how Google triggers your ad. If you don't specify a particular Match Type, Google defaults to Broad Match–which generally works in their favor, not yours.

6. DON'T Overlook Negative Keywords

Negative keywords are those have no bearing on the context of your keywords or words you want to be sure are not associated with your campaign. For example, in a campaign advertising windows for the home, you'd want to avoid anyone also searching for the word "Microsoft."

Ensuring that these words do not appear in your campaign can also help improve your Quality Score–since you're not generating unnecessary ad impressions that garner poor CTRs.

7. DO Separate Your Campaigns

Google's default settings at the campaign level include both Search and Display together, and do not separate out Mobile.

You should manually "opt out" of having your search keywords run on Google's Display Network–especially if you want to preserve your budget exclusively for Search. I'd also suggest that you set up a separate search campaign for mobile users, to help optimize your visibility and click costs there, too.

8. DO Use Free Conversion Tracking

Unless you are running a branding initiative and don't care how much money you spend, you'll be flying blind if you run a campaign without conversion tracking to tell you how well your clicks convert into action. Use Google's free conversion tracking code to give you more insight and help you prune and optimize your campaign.

9. DO Test Different Ad Versions

Even after you put all this effort into your campaign setup, you shouldn't assume you know what ad will actually attract the right audience. Instead, test different versions of ad copy or offers: Run three tests for each Ad Group for a week or so, determine the winner, and delete or tweak losers based on the results.

10. DON'T Stick With Under-Performing Keywords

Keywords that produce clicks but don't convert eat up your budget and drag down your Quality Score. Routinely review your campaign and get rid of them!

11. DO Take Advantage of Ad Extensions

Google now gives you more than just 90 characters of ad text, if you know about and use Ad Extension options. With Ad Extensions you can show products, give locations and phone numbers, or list additional links, all associated with a single ad.

12. DON'T Forget to Connect AdWords to Your Google Analytics Account

When you connect your AdWords account to your Google Analytics account, you can analyze your AdWords campaign data directly within your Google Analytics dashboard and see how an AdWords visitor affects your overall website activity. To learn how, read item No. 5 in this list.

When every ad dollar counts, you really cannot afford to miss these simple but crucial AdWords optimization techniques.