There are books on this topic, but here are some of the main things to keep in mind:
Keywords: Are your keywords too broad? Too specific? It’s important to get inside your customer’s head and figure out what queries they will be typing into Google that your product or service can provide an answer to. If your keywords are too specific, you may miss out on customer opportunities. If they are too broad, you will be paying for traffic you don’t need.
Negative Keywords: Failure to use negative keywords (or enough negative keywords) is the #1 problem I see in AdWords campaigns that are struggling. A lot of wasted ad spend can be prevented with the use of negative keywords. Using a tool like Negative Keyword Pro will help you identify negative keywords for your campaign.
Conversion Tracking: This needs to be set up in every campaign. You need to be able to track sales conversions, lead conversions, and call conversions (including calls made from your website). Without conversion tracking, you are shooting blind. The keywords and ads that you think are going to convert best are not always the ones that do.
Network Targeting: Make sure your ads are targeting the correct network (search vs. display) in order to get the best results for your particular business. Never follow Google’s default setting and set up a combined search and display campaign. Also, pay close attention to the search partners network data and exclude this network if necessary.
There is a lot more I could go into regarding ads, landing pages, bid amounts, etc. But the above aspects are the ones that will produce the biggest positive or negative effects on your campaign, depending on how well you utilize them.