Experiments and Miscellanous
Google wants you to constantly experiment with testing. This helps generate more conversions which should make both you and Google happy. One important term is conversion rate which is simply the number of conversions divided by the number of clicks. A high conversion rate indicates the clicks are relevant and may lead to a higher AdRank. The Cost per Conversion which is different from the Cost per Click (CPC) is calculated by the average Cost per Click divided by the conversion rate. The Cost per Conversion is what every client is really after. How much do you need to pay someone to do a certain action? The Cost per Conversion is your answer. It was previously discussed how to place the conversion code on a website. Google recommends you place the conversion code in the Thank You or Confirmation page.
Experimenting is important to Google. One tool that is helpful is the Google Bid simulator which will tell you how many more clicks you can expect if you increase your bids. This is useful in setting up a budget for the campaign. At some point the clicks should become too expensive per conversion to be worth bidding on. Or you purchased all possible clicks.
Google suggesting that at a minimal it takes about one week to gather data in an AdWords Experiment. Google also recommends one month if possible. You can use the Campaign Experiment tool to help. When testing your ads you should set the rotation to evenly to begin. You can always change the rotation later. Google recommends 300 clicks per ad as the lowest amount of clicks for an ad test. On a side note I use 1000 clicks per ad because its easier to do the math calculations. Since Google focuses on conversions you should be aware that Google recommends at least 7 conversions as a minimal for an ad test. I typically use 10 which again helps with the math.