You should have your campaign set up with appropriate text ads, AdGroups, and a huge list of keywords. Now its time that you should completely understand how everything else works in Google so you begin to receive record breaking sales days.

For more information about Google's Ad Ranking, I recommend you watch the following video by Google:

Rules

Google is very strict and serious about their advertising, this is one of the many reasons why Google AdWords has high conversion rates and is so popular. Here is a simple list of rules which every advertiser must follow, that is, if they want to continue advertising. These are some basic things everyone should know about Advertising in Google.

Almost always 8 Advertisements are shown per search page. Sometimes it can be as many as 10 advertisements per page. Don't expect to have your ad appear on the first results page if its average rank is above 10.
Google gives each webpage one advertising slot per keyword. This means you can't create another Google account and advertise the same webpage for the same keyword to get two Advertisements instead of one. The way Google determines this is by your Display URL and Target URL. They will never allow two advertisements with the same Display URL to be shown in the search results for the same keyword.
If a merchant is advertising for a certain keyword and you're an affiliate for that merchant, Google will not show your Ad for that keyword unless your Quality Score is higher than your competitors.
Your text ad can not have any misspelled words, unless they are commonly misspelled words. If you break this rule Google will take your ad offline.
Your text ad can't be all capitalized, but the first letter of each word can be capitalized.
If you are an affiliate, Google only allows one affiliate advertisement per website per search query. This also means that if you are a merchant and you want to advertise for a certain keyword, but one of your affiliates has an advertisement for that keyword, your advertisement will not be shown. You can override this rule if you bid higher than the other advertiser or if you have a higher Quality Score than the other advertiser.
Your destination URL cannot have a popup window on the page. Google defines a popup window as any window that opens up into a new browser window. This includes pop-under ads. They do not mention anything about dynamic or flash pop up windows.
Your destination URL cannot link to a webpage that is under construction.
If you state your price in your text ad, then you must show this price on your webpage within 1-2 pages of your destination page.
You cannot use superlatives (Best, Most, Top, etc…) in your advertisement unless it is backed by a legitimate 3rd party support.
If you advertise a free offer in your text ad, it must be supported within 1-2 clicks of your destination page.

Tips

Increase Your Ad's Position So it is On the Next Page

If you want to receive the most impressions and the most clicks, you will want your Ad to be displayed on the first page. If your ranking for a keyword is 8.0 or less, then your advertisement is definitely on the first search page. If your advertisements ranking is 8.1-10.0 then your advertisement may be on the first search page, but is most likely on the second search page. If your average ranking is 10.1 and up, then your text ad is not on the first search results page.

You may have heard that the first three ranking positions always receive the most traffic, and are therefore should be where you want your advertisement to be. This is not always true. Usually the first, second, and third advertising positions are very pricey, especially when compared to the fourth through eighth positions on the same page. I would not recommend increasing your bid(s) just to receive a 1st to 3rd ranking position. Doing this would cut into your profits. Instead I would recommend aiming just to receive a first page position. This way you will receive the same amount of impressions as all of the ads on the first page giving you the same chances that your text advertisement will be the one that is clicked.

What if you can't afford to display your advertisement on the first search page?

If you can't afford to put your Ad on the first search page you should bid what you can afford. Never bid too much for a keyword, especially a poorly performing keyword, because this will cause you to lose money.

How does Google Determine the Position of my Advertisement?

The way Google ranks their advertisements is probably one of the most confusing things to understand. They rate your website using a ranking formula, which they call a Quality Score. Unfortunately, they do not release much information about their Ad Ranking formula but they do say that it is something like this:

Ad Rank = Cost Per Click x Quality Score

It may not look too complicated, but Google uses a complex algorithm called the Quality Score to determine a lot of things about your advertisement. Don't worry, if you're confused, I explain more information about this later.

What is the Best Way to See if My Advertisements Being Displayed?

If you don't trust the Google ad diagnostics tool and you want to make sure your advertisements being displayed do not search for it on Google.com.

Google realizes that people get excited and want to see their advertisement, but if you search for it on Google.com you can potentially hurt your advertisement's performance. Here are two ways you can hurt your ad's performance by searching for it on Google:

If you search for your advertisement and click on it, it is seen by Google as click fraud. People will try to click on their own advertisement to increase their CTR's and Google knows when you do this. If you do this you can risk having your account banned.

If you search for your advertisement you're adding impressions to your ad and since you're not going to click on it, you're potentially hurting your quality score.

So…What's the Best Way to Search for My Advertisements?

Good news! Google has a tool (or a website address) that lets you search for your advertisements. This is even better than searching for your advertisement on Google.com because this tool lets you choose the region where you want to search for your ads. Like if I only advertised in “New York City” I can specify that and it will tell Google to display the ads specified for “New York City” only. Likewise, I could see if my ads were being displayed in Australia, Ireland, France, USA, etc. Even better, this tool doesn't hurt your account in anyway! If you accidentally click on your ad, nothing will happen and the impressions don't count against you. To access this tool, simply go to the website listed below:

https://adwords.google.com/select/AdTargetingPreviewTool