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If you are purchasing AdWords and using Google Analytics, connecting the two of them together during the implementation or setup process is absolutely necessary. Once you have done this, the reports that become available are extremely powerful for those people within your organization who are responsible for managing/optimizing the performance of your AdWords spend. These reports provide specific information on the ROI or margin of your investment, the performance of your investment based on the position that your ads are being displayed, as well as the performance of different ad versions. The later, the Ad Versions report will be the focus of this post.

You ultimately want to optimize your paid search campaigns both pre and post click. The pre click optimization will look at all methods available to get as much targeted traffic as possible to your site at the lowest possible price. Post click optimization involves the user experience and offer that you provide your visitors when they arrive at your site via your paid search ads. Thanks to Google's Quality Score your post click efforts can impact your pre click results. By improving your landing pages you are not only providing a better user experience and improving your conversion rate, but you may also improve your Quality Score which will allow you to have your ad placed in a better position, for a lower price. So don't forget to look at what is happen post click when you are optimizing paid search campaigns.

The Ad Version report is found in the Traffic Sources section, inside the AdWords grouping. The report defaults to show you a graph of the number of visitors that have been driven to your site via your AdWords campaigns (you can change the metric being graphed to a handful of other choices if you would like). Below that you will see how many total visits were delivered via the number of different ads you have. This will quickly give you a sense of how much you have to manage in terms of the number of ads.

Our best practice when it comes to managing paid search marketing is to always have two ads running against each other—a champion and a challenger. As soon as you have collected enough data declare a winner and create a new challenger. You should always be trying to improve your click through rate and conversion rate by improving your ad content. When creating a champion/challenger situation in Google we recommend that you configure your account to rotate your ads, not optimize. This is a very crucial step in the process.

Below the graph you will find three tabs and a table of information. The available tabs are Site Usage, Goal Conversions, and Ecommerce (if you have ecommerce enabled). By default the dimension for the data listed below is by Ad Content. The columns below represent your different ad variations sorted by the number of visits that they have provided your site. Ideally you would like to view this information in ad pairings, that is the champion vs. the challenger, and not mix them all together. To help with that we have another tool: our PPC Data Miner application.

From the Site Usage tab you can determine which ad variation has the better bounce rate, has lead to more pages views, and gets people to spend more time on your site.

To really dig into this report you will want to switch over to the goal conversions and/or ecommerce tabs. These tabs will provide you with information on how your different ad variations are contributing to you revenues, have the highest average order value and which ones are offering the highest conversion rates. For site with an Adwords spend in excess of $5000/month you will likely be reviewing this report on a daily basis, looking for champion/challenger pairs that have enough data to declare a winner, and create and launch a new challenger ad.

To declare a winner you will usually want the champion and the challenger to each have delivered 100 visits to your site. If it appears to be a close battle then let the competition run longer.

The main take away from this should be that you should create a process that allows you take full advantage of the data available in the Ad Variations report. This process should involve the continuous testing of ad variations, where winners are declared regularly and new version are created to challenge the champion ad. Remember, that there are a lot of different metrics available in this report, so it isn't only for ecommerce sites, but also lead generation sites and even publishers.