Steps
Open a Google Adwords account. Go to http://www.google.com/ads/ and click on Google AdWords link and click Sign Up Now. Follow the presented steps to open account. Create first AdWords campaign. The key to getting clicks at a very low cost is setting up your keyword lists and location settings correctly. You will need 2 campaigns; one local, one national. We will setup the national campaign in this step. Login to your AdWords account and click "Create new AdWords campaign". On this first page you should be able to use the default settings for Name, Language=English, and Target="Global or nationwide", but you will need to enter an Ad Group Name. The name of your business should be fine. After you enter the Group Name, click Continue. If you are in the US, you can use the default settings the Target customers by country page so hit Continue.
Create your ad. Read the Common Questions sections before you start and then work up a short, catchy ad.
Build your keyword list. This step is the key to getting targeted, low cost leads. First you need to make a base list of keywords that people would use to find a business like yours. For example, a Chinese Restaurant would use terms like: Chinese, Chinese food, Chinese delivery, etc. At this point put in as many words and terms as you can think of, you can always remove keywords later. Next you need to localize the list by making a list of locations your business serves and combine the two lists. The final list should contain all possible combinations of the two lists. This can be an enormous task, but there is a great tool that makes this very easy. Go to http://5minutesite.com/local_keywords.php and enter your Zip Code, the Radius of your customer area and enter your base keyword list into the "Enter one keyword or phrase per line" box. Scroll down, click Submit and the page that comes back will have a localized list ready for you to copy in to the AdWords keywords box. Make final settings and start campaign. With a localized list, you can set a maximum cost-per-click (CPC) of $.05 and $.10; use a setting you feel comfortable with paying to get a potential customer. Set you daily budget to $1 - $2 a day or any amount you can afford. Now Save Campaign to finalize your settings.
Set up a campaign using Google's location targeting option. Google attempts to locate users based on their Internet address. Due to a number of technical issues beyond the scope of this How-To, Google often can not locate a user, and as result, will only show them ads from the the national ad pool. This is why we setup the national campaign first; it will be made available to larger audience of users.
Set up a second campaign using Google's local targeting, to cover all your options. Login to your AdWords account and click "Create new AdWords campaign" and follow the same steps used to create the national campaign with two exceptions: In the section "Target customers by location" select either "Target customers by regions / cities" or "Target customers in a circular area around your location" and enter your location and service area. The other exception is you will use a keyword list without location terms added to it; just use the base keyword list you used in the national campaign before location terms were added.
Maintain your campaigns. Login from time to time and see which keywords are doing well, add any new keywords you think of and remove terms that have a high cost per click that you feel are not resulting in new customers.
