Almost every day when I look at certain Google Adwords advertisers and their Adwords campaigns I am reminded of an old saying: “A fool and his money are soon parted.” The only question is…HOW soon?

I find it amazing how long someone will bid on a keyword that is losing money. How do I know that they are losing money? Simple. Using stealth keyword research I can see not only how long some competitors have used certain keywords, but their ad position, how their ads have varied over time, and how their website has changed as well.

Next, I visit their website and look for signs that they may be getting poor conversions…and since I know my numbers and what it takes to get a conversion, it doesn’t take a complicated math formula to quickly and easily determine that a competitor may be throwing away sometimes thousands of dollars a month by advertising on a single keyword.

You may ask, “Why would someone continue advertising on a keyword that is losing them money?” There are four (4) answers that immediately come to mind when I hear this question.

1. They are ignorant and don’t know how to run an adword campaign properly.

2. They know that the keyword is losing money, but don’t care because they are trying to establish “brand awareness.” (See answer #1 for my opinion on this strategy.)

3. The company is funded by venture capital and their goal is not necessarily to produce a profit, but to go public or be bought as soon as possible if they don’t go bankrupt first.

4. The more likely reason is that their Google Adword campaign is making money as a whole and they are leaving “well enough” alone. In other words, collectively, all the keywords that they are bidding on are making them money; they just don’t pay attention to which ones are good keywords and which ones are bad.

Since #4 is the most commonplace, let’s examine how this situation can be corrected. Depending on your level of daily spend, you should perhaps be monitoring your keywords on a daily basis.

Learn to trust your market. Your market will tell you which keywords work and which keywords don’t. Your market has a voice and they always vote with their wallet or pocketbook.

Too often it is easy to “fall in love” with a keyword just because WE think it is a good one. But if you have tested that keyword properly and determined that a statistically significant amount of traffic has arrived on your website because of that keyword, but the conversions associated with that traffic is poor, then it may be time to end your love affair with that keyword and focus on finding more profitable ones.

There are many Adwords management tools that allow you to track, test, and analyze keywords so that you are utilizing your Google Adwords campaign in the most efficient manner. Some of these tools are free and others are quite expensive.

But just having the right tools does not necessarily mean that you are going to profit from them. You must invest some time to master them as well, so you can handle your Google Adwords campaign management efficiently, and dominate your competition.