This is a bit of a tricky topic, everyone has their own opinion and its probably all different. Google and other Adwords experts have best practice and guides for setting up campaigns. People have wrote entire papers on the proper Adwords setup and I could discuss this ad nauseam. I will try to write a very high level summary of what I feel are the more important issues when setting up campaigns and link to more detailed information at the bottom of the post.
Essentially, proper campaign setup really depends on what your marketing goals are. The main issue is that every business has goals that are unique to them. Before you even open your Adwords account you need to assess who your target audience is, where they are located (geographically) and what they may be looking for. Some of this information can be gleaned from the Google Keyword Planner tool in your Adwords account (which I will discuss in a separate post). You should probably have already done some market research into who your potential customers are and know more or less where they located.
What to do if your customers are spread over a large geographic area?
This is an important step in planning out the structure of your Adwords campaigns. If your customers are spread over a large geographic area for example east cost, west coast or even across continents you may want to create a separate campaign for each area. The primary reason is that you want to be able to adjust your bidding strategy based on geographic location of your customers – specifically the time of day they are most active. The problem is that day-parting (adjusting your keyword bids based on the time of day) is a setting on the campaign level and not on the ad group level. So, if you were to create a campaign and target both US and UK in the same campaign you wont be able to properly adjust the bids because of the time zone difference. To clarify; lets say you notice that users in the US convert better during the morning hours. So you’d want to increase your bids accordingly, however you also notice that users in the UK also convert better during morning hours, but morning in the UK is the middle of the night in the US so you can’t adjust the bids. In this case you’d want to have two separate campaigns, one for the US and one for the UK. This way you can adjust the bids on each campaign separately.