hvass has covered a list of general tips - here are some SAAS specific ones that might be really useful for HN readers.

It is very important that you understand and measure your customer lifetime value. Estimate this value too low and you won't be competitive in the auction (this is a big deal if you have aggressive growth targets). Estimate too high and you will lose money. And you won't even realise you are losing money until 6-8 months later when it becomes apparent you got the CLV wrong.

There will be high volume "I want to buy this now!" keywords which all of your competition will be after like crazy. Winning in these auctions requires a decent click through rate and a high click value. The good click through rate is required because it will give you a good quality score which leads to a lower cost per click; you will need this discount to be competitive unless your CLV is way ahead of the competition (which realistically it won't be). You need a high click value otherwise you can't afford to be at the top of the auction.

You will generally find that there will be things you can say in ad texts that will get you an excellent CTR. Things like "Free" or specifically mentioning pain points for your audience might work well. Your business model must be able to support these things otherwise you will get the click through rate but not get the click value if you can't match the proposition in the advert with your landing page. Figuring out and implementing these hooks requires a strong link between product and marketing so it is textbook growth hacker territory. It is really the only way to dominate the top of the auction with long term profitability.

There will be many other search queries that do not signal the intent to purchase right away. "How do I" or "What" queries often fall into this category. Tracking the value of clicks on these queries is harder because the actual value happens many visits/months in the future. For this reason PPC managers at your competition may underbid on these keywords which gives you an opportunity. The risk is, of course, that in your enthusiasm you will overbid and end up losing money. So the keys to managing this kind of keyword well are to improve tracking and to increase the value of a click on these keywords. Both of these are facilitated by making the primary call to action on the landing page for this type of query an email capture. Having an email address gives you a way to link up an eventual purchase AND a way to increase CLV because you can email market to the prospect.

AdWords for SAAS is a nerve-wracking games compared to e.g. AdWords for ecommerce. In ecom the product is sold fairly quickly and since AdWords payments can be made net 30 cashflow can always be positive. For SAAS this is completely not the case - the acquisition cost for a new user won't be paid back for many months and it is easy for businesses to end up in a hole. But in a business environment driven by investors and the need for rapid growth being too conservative in PPC has other undesirable consequences.

Quick sum up:

- The mechanics of AdWords is fairly simple - match the users query to a keyword. Show them the right ad text and landing page. Make sure you pay the right amount for a click

- Integrating AdWords into a business is harder and may require changes to the business model (to support the kind of proposition that performs well in search)

- Work on conversion rate optimisation and on increasing the value of a click; if you can do this better than the competition (which is hard - don't assume they are stupid) then the AdWords part will be quite easy; you don't need to stress about your CPA when you are at the top of the auction and you know you are well below your ceiling. You do need to stress about your CPA when you are in position 3 and increasing CPA by $20 will put you in position 1.