I was wondering what the best number of Ad groups to be used in a Ad words campaign is? Does it matter? I only have a small budget. Am I better off with more ad groups and less keywords, or visa versa?
Best practice is to have more ad groups with less keywords. This will helps to easy optimization of a campaign on ad group level. I personally creating 20+ ad groups for a campaign if possible.
It does't matter you have how many ads in a ads group while both of them still target the same keywords and they only show one at one time. But you may create campaign to do A/B testing for those ads and find out which title and description will bring higher click and higher conversion rate.
If your website has lot of categories then its important to have more adgroups for various categories, thus you can focus on each category and the number of keywords in each adgroups.