Ad groups allow you to associate keywords with ads.
Here is an example:
If you have an ad campaign for the Canon camera brand, then you might consider having an ad group specifically for the Canon Rebel t3i.
While writing the ad for the Canon Rebel t3i ad group you might include the words 'Canon', 'Rebel', and 't3i' in the title and the description. Including the aforementioned words will help improve the relevancy of your ad and get more people with the intent to buy the specific model of camera clicking through to your website. Additionally you would want the keywords in the Canon Rebel t3i ad group to be focused specifically on the Rebel t3i. Those could be keywords like Canon Rebel, Canon Rebel t3i, Canon Rebel t 3 i, Rebel, Rebel t3i, Rebel t3i sale, etc.
The ad's destination URL should be directed to a product specific page in this case. If they search for a Rebel t3i, and your ad mentions a deal on a Rebel t3i, you should be sure to send them to the page where they can right away purchase the Rebel t3i.
With this in mind, let's create an ad group.
The first thing you need to do is navigate to the Pay Per Click Dashboard. You can either click on the link for the decision in the Decisions page, or use the Jump To menu at the top of the page and click on Ad Campaigns.
Once on the Pay Per Click Dashboard, click on the Ad Groups tab and then click + New Ad Group. A form will appear, and then you need to select the campaign that you want to add the Ad Group to. Next, input the Ad Group Name and the Default CPC. Lastly, search for keywords for that Ad Group, and then save. From here, the simulation will automatically go to the Ads tab for you to create an Ad for that Ad Group.