Do you think traffic can be bad? Not only can it be bad, it can also leave you penniless when running pay-per-click (PPC) campaigns. Unless you work out a plan for managing negative keywords. In this post, I'll discuss why we need negative keywords, how to identify them and use across your Google AdWords campaigns to get more relevant traffic and cut PPC spending.
Why do you need to say "no"?
Three years ago I helped one of my customers save quite a fortune on adding just one negative keyword to his ad campaigns in Google AdWords. Any guesses for the word? It was download. Imagine a company that provides software development services to independent vendors. There was NO software for download at their website, but their ads were showing for such keywords as
software development tutorial download
download flash development kit, etc.
The worst thing however was that most of the irrelevant traffic came from display network, contributing to a very low CTR and enormous cost per acquisition.
After discussing the issue, we worked out a list of negative phrases that have been successfully used in the campaigns for more than 3 years already. Are you still unsure you need negative keywords? 
What to start with?
Let's start with understanding what negative keywords are and what their match types imply. Generally, negative keywords help advertisers filter out unwanted traffic, before the users reach the landing page. In Google AdWords negative keywords are marked with the minus (-) sign at the beginning of the word, e.g. -download, -"download," or -[download].
Just like all normal keywords, negative ones can be used with different match types. And here's where the trouble starts: in most cases we are 100% sure for which search queries we would like to show our ads, but we cannot say with the same level of certainty, which keywords should go in the negative list. Besides, you can filter out more traffic than you should by using the wrong match types. Fortunately, Google presented a quick reference table not to get lost in them:
Negative broad
When you use negative broad for a keyword, it means that your ads won't show anytime this entire term is used in a search query. For example, if your negative is adwords coupon, your ad will not be shown to someone searching for free adwords coupon or adwords coupon 2012. However, the variations of this phrase will still trigger your ads, so if you want to exclude both singular and plural forms, you need to add both as negative. Also, if someone searches on only one of the words (e.g. google ppc coupon), your ad will still appear, as the word coupon on its own is not a negative keyword.
Negative phrase
Negative phrase is similar to the traditional phrase match of keywords, as it excludes the phrase (with the exact word order). For instance, -"adwords coupon" will exclude: adwords coupon, adwords coupon 2012, get adwords coupon, etc.
But your ads will run for such queries as: adwords google coupon, coupon adwords, adwords coupons, ppc coupon, etc.
Negative exact
This match type helps exclude little traffic, since it eliminates only the exact term in the exact order. Getting back to our examples, if your negative is [adwords coupon], and somebody searches for new adwords coupon, your ad will still appear.
Here's good video explanation of negative keyword match types:
Where do I get negative keyword ideas?
1. Mr. Brain. Logically, there may be a couple of keywords and key phrases you'd like to definitely "ban" in your AdWords account, so the first source of ideas is your own brain! For example, you can consider the seasonality of your products and build themed lists of negative keywords for certain months.
2. Search query report. Google AdWords lets you see what exactly people typed in, before they clicked on your ads. See some failure keywords in the report? Add them to the list! I'd recommend looking through the search query report on a regular basis (frequency depends on the amount of traffic you get, I usually do it once a week.) not to miss the opportunities to refine the paid traffic. The good thing is you can mark keywords as negative right here in your keyword report.
3. Google Analytics. With Google Analytics reports you can see the organic search terms for your website. Probably, some of the keywords you find in the organic search report will enrich your list of negative keywords.
4. The Google AdWords Keyword Tool can be helpful as well. Type in your key phrase and find which keywords are associated with it. You can experiment with different match types to get the "logic" of Google.
5. Search "suggest" functions. That's easy, almost every modern search engine has the "suggest" function, which shows some popular phrases as you start typing your query. Phrases that might generate non-convertible traffic should go to the list of negative keywords.
6. Long-term sales data. The ideal variant of keyword performance tracking is when you monitor conversions and actual sales the certain keyword brings. There was a case when I had to exclude a highly relevant keyword with a good CTR, since it didn't bring conversions at all (and the CPC was pretty high). This helped me re-arrange the pay-per-click budget and bid higher for the keywords that did bring conversions and sales.
7. Generic lists of negative keywords. You can learn a lot from what other PPC managers have experienced. There are ready-for-use lists of possible negative keywords built by some experts. However, you should be very careful with such lists, as they are not a universal fit for advertisers and are good for getting new ideas and thoughts. You can take a look at such lists here:
How do I add negative keywords?
If you have a set of negative keywords you would like to use for multiple ad campaigns, you should create a list that would be shared by them. This AdWords feature was introduced about a year ago and I'd say it saves a lot of time when you manage a large account. Another good reason for creating such lists is that you can quickly adjust all your ad campaigns for seasonal sales. Say, your souvenir store sells only Halloween stuff in October, why not build a valentine's day list of negative keywords, which will be disabled later on in February?
To create a new list, click on the "Shared Library" option under All Online Campaigns, then choose "Negative Keyword Lists". Select the "Add a New List" option and add a title to your list. Click "Save" – your list has been created.
Additionally, you can add negative keywords at the campaign/ad group level. Go to any campaign (ad group), click "Add keywords," and type in the keywords with "-" sign at the beginning. Pay attention to the match type you choose!
When you manage a lot of AdWords campaigns, you can utilize Google AdWords Editor. When exporting the account data in the CSV format, you will see a separate column with campaign's negative keywords. Bulk edit and macros scripts might be handy to save time on editing.
How to test things
For sure you can go to Google search and see whether your ads appear for certain terms. But I don't like the idea of producing such useless impressions, so I'd better use the Google ad preview tool for testing. After you've completed adding negative keywords, go to the "Ad preview and diagnosis tool" under the "Tools and Analysis" tab, choose your geographical settings and click "Preview." I bet after testing you'll have to get back to review the keywords and add/remove some.
Now, you have much better understanding of how negative keywords work and why they are important for the budget. The earlier you start managing them, the more efficient your ad campaigns will get. Don't wait for too long - start getting positive results with negative keywords!