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The Keyword Positions report will help you determine the positions of the keywords you are using in your AdWords Campaigns. To get to this report, click Traffic, Adwords, and then Keyword Positions. The report will provide you with something that looks like this: The image comes from the Google Analytics Blog, which has plenty of information to assist you in using Google Analytics.
The only way this report will work is if your AdWords and Analytics accounts are linked together, and if you are tagging your links with the auto-tagging feature. For help with this, you'll need to login into your AdWords account, click Analytics, click "I already have an Analytics Account." and then choose the account you'd like to link to from the list. Make sure the auto-tagging box is checked.
On the Google Seearch Results Page, AdWords Ads are displayed in various locations. By knowing where your ad is displayed on the results page, you can determine a bit more about your users and make changes to your campaigns where necessary.
T1 through T3 are results displayed at the top of the page. Results 1 through 8 indicate the sidebar placement on the first page of results, 9 through 16 indicate those same positions on the second page of results, and so on.
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Making this Report Work for You
This tool is helpful for you as an advertiser because you'll be able to you see the "value" of your keywords, and how much you are paying for it in terms of how well your page is ranking in the search results. This is a good tool to use in conjunction with the Position Preference tool in Google AdWords.
This will help you decide whether you need to purchase more or less AdWords advertising, or change the keywords you are bidding on and using in your current AdWords campaign.
Google Analytics Reports: Keyword Positions
Google Analytics includes the nice feature of integrating your AdWords account with it. Analytics will provide you with data on your AdWords campaigns to help maximize your results, and optimize your budget.