If you have a six-figure annual budget and would be happy with a mere 10% return on investment (ROI), don’t bother bidding for popular 1-word keywords. The competition for most single-word keywords is fierce, searches on single words are made most frequently by people who are simply not ready to spend their money. They are merely investigating the market, gathering information, they are “tyre-kickers”.
1-word keywords would probably bankrupt you very quickly.
2-word keywords are a better bet, they can still command a high cost per click in competitive markets. Surfers who search on them may still not be ready to buy, although they’re getting there.
Keyword phrases of three words and up are known as “long-tail” keywords. The word “keyword” in pay-per-click advertising can mean a phrase of more than one actual word, like “New York”. A “keyword phrase” consists of more than one “keyword”.)
3-word keyword phrases have the highest conversion rate. People who type three words as a search term have usually done their investigations, know exactly what they want, and are now ready to buy.
4-word keyword phrases fare slightly less well because the searcher may indeed be ready to buy, but is comparing prices for a very specific item, or is doing some academic research.
Don’t understimate the power of negative keywords! If you sell tulips. You don’t want your ad to appear when someone searches on the term “grow tulips”. They may not click on your ad, it’d be an unnecessary impression, and its click-through rate (CTR) would suffer. Specify “grow” as a negative keyword.