Perhaps the most important element in all of Google AdWords is your keywords. A mediocre ad with a killer keyword list will convert far better than a great ad to a mediocre keyword list. To succeed in the AdWords game, you need low-cost keywords that convert at strong ROIs.
Question is "how do you find these keywords?"
Start with a Broad Keyword Base
Start by brainstorming all the different kinds of base keywords you could bid on. For example, if you’re promoting a guide on how to get better grades, you might start your brainstorming with:
Get good grades
So on and so forth. Start with as broad a list as you possibly can. This should give you all the "conventional" keywords that all your competitors will also be bidding on, as well as a fairly large list of unconventional keywords that might have less competition than other keywords.
Narrowing Down Your List
Once you have your big of keywords, the next step is to narrow these down to just a select few to run.
Start by looking through the traffic stats in the Google Keyword Tool. Ideally, you’re looking for keywords that have enough volume to make it worth your time to optimize, but not so much traffic that the traffic is untargeted.
In other words, you probably don’t want to bid on "grades" or "reading," even if there’s high volume. You also don’t want to bid on keywords like "How to get better grades in 4th grade in Arizona" because the volume just isn’t there.
Also take a look at the estimated CPC in Google. Don’t actually take these numbers at face value, as these numbers are based on what you’d need to bid to get first position.
You usually want to be between positions three and five, so your actual bid will be much lower. But the estimated CPCs will give you a very good sense of which keywords cost more and have more competition, and which keywords are cheaper to bid on.
Finalizing and Refining Your Keyword List
Compile your final keyword list. Try to start with a small keyword list of just the keywords you think will be most likely to convert. Bid on these keywords with an exact match bid. Target only Google and not the rest of the syndicated search network.
The goal is to aim for the highest possible ROI keywords first, so you can verify that the campaign can actually be profitable in the best case scenario.
Then once you’ve proven profitability, broaden your keyword base and experiment with phrase and broad match. Split test the syndicated search network traffic as well as Google traffic.
Track carefully, so you know what kinds of keywords, match types and syndicated search engines convert and which ones don’t.
Those are the basics of compiling a successful keyword list for Google Adwords. Start broad, then narrow down to your final list. When you bid, start with just the keywords most likely to make money, then gradually make your way to broader keywords.