Being thoughtful about negative keywords is an important step in setting up effective search engine marketing campaigns. If you do not include the right negative keywords in your campaign, you will be wasting a lot of impressions resulting in significant increase of your advertising cost. For example, if you are an enterprise software provider and you do not want your ad to be shown to people searching for "free" software, you should use "free" as a negative keyword in your campaign.
As you are setting up your campaign think about the negative kewords you want to include in your campaign. The matching options that you use for regular keywords (e.g., broad match, phrase match, exact match) can and should be applied to negative keywords as well. For example, if you are not an open source software provider and are not interested in showing your ads to folkd who are looking for open source software, you might want to filter out searches where people are looking for open source software only. By using "open source" as a negative keyword and using the "phrase match" keyword matching option, you will be able to filter out those searches.
As you set up campaigns and ad groups in Google Adwords, you should be able to identify potential negative keywords and add them in the campaign/ad groups. It is, however, not sufficient to just do a one-time set up of negative keywords. With your campaigns running, you should periodically check for potential negative keywords for your campaign by looking at the actual search data. In Google Adwords, the "Keyword Tool" and "Search Terms" report are two great ways to find potential negative keywords for your ad group.
Effectively utilizing negative keywords can help you run cost effective ad campaigns with your ads more targeted to potential buyers of your products/services.
This is a great reminder to make the most of negative keywords as well as to update them from time to time, rather than setting them up and forgetting about them. And the example of "free" seems like a must-have for most marketers, unless of course we are intentionally driving web traffic through a free offer. But in most cases if we are paying for the click we expect ROI on that click and should screen out the "free" stuff seekers.
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