This information also applies to the Organic Search Traffic and Paid Search Traffic reports. Paid search includes AdWords traffic, as well as paid traffic from other search engines.
This report lets you see a breakdown of organic vs paid search traffic (Traffic Type), along with the search engines and campaigns (Source) that are sending traffic.
While organic search may drive many times more traffic to your site than paid search, you can use this report to see the quality of traffic driven by each method. For example, if you look at Site Usage statistics, you may see that organic search delivers 20 to 30 times the number of users, but those users view only half as many pages and have twice the bounce rate. And when you look at Ecommerce statistics, you may see that users from paid search have a much higher rate of transactions, along with a higher average value per transaction, and a higher dollar value per session. If you find that your users who arrive via paid search represent a significantly higher value customer, that may be an argument to invest more in paid search.
You can test whether paid search contributes to the level and type of traffic you want by gathering data from periods when you run paid-search ads and comparing that to data from periods when you don't run those ads. You can also experiment with turning AdWords keywords on and off to see whether there’s a resulting change in traffic.
Look at the different search engines (sources) that drive traffic to your site to determine where you want to invest your resources. For example, if you're getting an overwhelming amount of traffic and revenue from a particular search engine, that's an obvious source of profitable traffic and an area in which you might want to make further investment; but you might also find another search engine that delivers only a few users, but ones who represent a very high Per Session Value. In this latter case, you might want to increase your spend in that area to drive more high-value traffic to your site.