When you are running a Google AdWords campaign, it is important to include negative keywords. You should consider the use of negative keywords if some of the keywords or keyword phrases in your campaign are broad and generic. Negative keywords will prevent an ad from being shown on a publisher's website if the negative keywords are in the search phrase/text area that Google uses to match ads and content.

By using negative keywords you will reduce the number of click-throughs that would not convert to sales anyway. In addition to that - the overall CTR of your ad (click through rate) will be much higher because there will now be a smaller number of Internet users be viewing your ad but not clicking. The higher CTR will cause the ad to receive a higher position without the need to work with higher CPC (cost per click) bids.

In your Google Adwords campaign you can add negative keywords by following the link "No campaign negative keywords. Add". On the next page you can add your negative keywords. The negative keywords you select in this section will apply to all Ad Groups within this campaign. So, you want to be careful selecting the negative keywords to avoid negative impact to your overall campaign.

An example for negative keywords to use would be as follows. Let's say you are selling cloth diapers for babies. Using the Overture keyword tool you search for diapers and get the following results.

183844 diaper
80390 adult diaper
74619 diaper bag
19184 diaper cake
13684 diaper girl
12509 cloth diaper
3968 diaper punishment
3108 huggies diaper coupon

http://inventory.overture.com/d/searchinventory/suggestion/

Assuming that the word "diaper" would be one of your keywords that you use, you can tell that it would be involved in keyword phrases not applying to the product you are trying to sell "cloth diapers". Therefore it would be recommended to add anything to your negative keyword list that absolutely does not match your target group. In this example I would recommend to exclude "adult diaper", "diaper punishment" and "huggies diaper coupon" and set them as negative keywords. Nobody searching for adult diapers would now get your ad served and therefore you would not run the risk that such a search would end up in clicking on your ad and you wasting your money.