Keywords are words or phrases you choose to match your ads with corresponding user search terms and relevant web content on the Google Network. Selecting high quality, relevant keywords for your advertising campaign can help you reach the customers you want, when you want.

1. How keywords work
Keywords are words or phrases you choose to match your ads with corresponding user search terms and
relevant web content on the Google Network. Selecting high quality, relevant keywords for your advertising
campaign can help you reach the customers you want, when you want.
Imagine you're craving a hamburger. You head to a restaurant, and see that the items on the menu are "Food" and
"Meat in between bread." Even if this restaurant served the best burger in town, you might leave without ordering
anything. They'd lose your business -- simply because the words they used weren't the same words you had in mind.
To get your ads to appear when people search for your product or service, the keywords you choose need to match
the words or phrases that people use, or should be related to the content of the websites your customers visit.
Watch this video
How to Choose the Right Keywords
Learn how to select keywords that get your ads in front of thousands of potential customers. Get tips on creating
keyword lists; find out how negative keywords can help you reach the right audience and how to discover new
keywords with the Keyword Tool. Read more about choosing the right keywords at http://goo.gl/jFckb. Subscribe to
AdWords Help on YouTube http://www.youtube.com/learnwithgoogle.
Example
If you sell frisbees, you can add "buy frisbee" as a keyword in your AdWords campaign. When people type "buy
frisbee" on Google search, your ad might appear on the search results page. In addition, your ad could also
appear on websites about ultimate frisbee.
You can also add negative keywords, so your ad doesn't show for searches that include those terms. This can help
you reduce costs by making sure your ad shows just to the audience you want.
When you select keywords, you choose how much you're willing to pay each time a customer clicks your ad (this is
yourcost-per-click or CPC). Choosing the most relevant keywords can improve the performance of your ads and
help you maintain low CPCs.

2. 
Google search and search partner sites: When you build your ad groups, you select keywords relevant to
the terms people use when they search, so your ads reach customers precisely when they're looking for what
you offer.

Google Display Network: If you've chosen to show ads on Display Network sites, AdWords uses your
keywords to place your ads next to content that matches your ads. Google's technology scans the content and
web address of a webpage and automatically displays ads with keywords that closely match the subject or web
address of the page. For example, on a webpage that includes brownie recipes, AdWords might show ads
about chocolate brownies or delicious dessert recipes.
You want your keywords to be relevant and high-quality. That's because keywords that are too general
make it difficult to reach potential customers, so you might make less money.
If you choose a generic keyword like "bags" to promote your luggage products, your ad could appear to
people searching for unrelated items like "tea bags" and "vacuum cleaner bags." Making your keywords
more specific and adding words that describe what you sell might help you reach the right customers with
your ads. In this case, you could choose more relevant keywords like "luggage bags," "carry-on travel
bags," and "buy luggage online."
Tips

Choose your keywords carefully. Include terms or phrases that your customers would use to describe your
products or services. Make sure your keywords directly relate to the theme of your ad and the page you're
directing your customers to. Keywords of two or three words tend to work most effectively.

Group similar keywords.Try grouping your keywords into themes. These themes can be based on your
products, services, or other categories. For example, if you sell rings, you can have a group of keywords for
"engagement rings" and another group of keywords for "wedding rings." Then you can create separate ad
groups for these groups of keywords and have specific ads for "engagement rings" and specific ads for
"wedding rings."

Pick the right number of keywords. Most advertisers find it useful to have somewhere between five and 20
keywords per ad group.

3. Keywords also help determine how much you pay. Each of your keywords has a CPC bid amount. These
bids specify the maximum amount you're willing to pay each time someone clicks your ad. This is called
the maximum cost-per-click (max. CPC). However, you might not need to pay the full max. CPC amount for
each click. An auction is run every time a customer searches, which determines which ads show for this
search and in what order.
The AdWords system evaluates your keyword for each auction and calculates its Quality Score. The
Quality Score is based on the recent performance of the keyword and your ad, how relevant the two are
to the search term, and other factors. The higher the score, the lower the bid requirement.
Tip
If you're just beginning to use AdWords, you might want to use automatic bidding. With this type of bidding,
you set a target 30-day budget, and AdWords sets your bids for you, aiming to bring you the most clicks possible
within that budget. If you want more control over your keyword bids, choosemanual bidding so you can set each
bid yourself.
When setting your maximum CPC bids, consider the value of a click. How much is it worth to you to have
someone visit your website? If high value, then you might want to set a higher bid. In general, a higher
CPC bid can allow your ad to show at a higher position on the page.
Negative keywords help make sure that your ad doesn't show for searches that include that term, which
can help you reduce costs. Negative keywords work with your normal keywords to show your ads just to
the audience you want. For example, if you sell dog clothes but your business doesn't carry any cat
clothes, you can add "cat" as a negative keyword to make sure your ad doesn't appear to people looking
for cat clothes.