A few people here asked that we have a thread on Adwords, so I'll start it. I've used Adwords since 2003 when you could do a nickel a click. Then, it became a dime and the race was off. Over time I've learned a lot and had a love/hate relationship. This year Adwords account managers have helped me in updating and learning new features. Currently, my ROI is the best it's been in at least a very long time, so I’ll try to share some ideas. For me, a big key is getting a repeat customer, but I also get some good sales from it.
First, you need to tie in Analytics, which is now part of Adwords. Analytics can show you what sales you are getting through different ads and you can get the actual order id. This helps in adjusting ads or even stopping those that don't pay off. I look a lot at last 7 days and 30 days. The 7 day view is good because you can see how small bid adjustments can cost a lot. This can be done in the Adwords screens too.
And using a Google Feeder like Jack's, you need to set up with Google Shopping. I was slow to get this going, but it's really working well on some items I sell. This gets you the ad boxes you see with pics at the top of Google as well as Google Shopping.
That covers the basics but AdWords and Analytics have a lot of features.
The biggest thing with AdWords is the better your ad is, the less you have to pay and still rank high. So, take advantage of all the little extras like extended links and callouts. Use all the characters you can but keep substance.
Once you create a base ad, you can copy and edit to make versions to test. I added "Fully Secure Website" to one of my ads and it get 4 times the click through than any of my others in that ad group. I did this based on switching to all SSL all the time. Adwords also serves it higher, so it likes it.
You can also tailor you bids based on areas like states (Texas for instance). Adjust based on days of the week or time of the day. Adjust up or down for phones with browsers. I bid that down because my biggest competitor on this isn't responsive in their site design.
Remarketing was a huge fail for me that burned up cash with no ROI.
Small bid adjustments that make you rank higher can cost way more than expected, so the 7 day running view is key. The other key is look at it every day.
There is some trial and error, but this can get you sales you are otherwise missing. A lot probably depends on your margin, but for me I'll give 200 to sell 1600 especially since some will repeat.
There's a lot more to this and I'm not sure how much this helps, but hopefully others have something to add.