Measure your clicks and click through rate. A good rate is 1%. Your keywords should have a good quality score (5 or higher) and a good CTR in order for you to keep them on. Pause or remove ones that have poor scores and rate.
A search term report is important to look at. You can see what search words people are clicking to find your ads. You can then add irrelevant words to your negative keywords and you can add good ones to your keywords and ad.
Use conversion tracking to see which keywords or campaigns are the ones driving traffic to your website and turning into sales.
Calculating your ROI with adwords – It is imortant to make sure you are making money with your ad campaigns. To calculate your profit, you look at your return on investment:
total sales – (your product cost and adwords total cost) / (your product cost and adwords total cost) = your ROI percent