A guest blog post by Dennis Yu, CEO of BlitzLocal, providing local advertising services to small businesses.

In the name of helping you optimize your campaigns, Google has been releasing tools to help you estimate an appropriate campaign budget, add new keywords, bid appropriately, and so forth. What you’ll notice is that all these recommendations have one thing in common.

To get you to spend more money.

I’ve never once seen the tools say “Hey, I think you should decrease your bids on these keywords,”– have you? Google recently released the “opportunities” tab, which is an enhancement on their campaign optimization tool:

Once upon a time you could throw as many keywords as you could think of into a new AdWords account and just start testing and refining as you go. You didn’t even have to worry too much about structure or theme.

I call this the old school brute force PPC, and guess what? It doesn’t work anymore.

Google have server farms to maintain, response times to uphold, and users to please. They really don’t have the patience or the time to process account with 2,000,000 irrelevant keywords. They want to simply show the best ads to those that are searching.

Penalizing poor account structure, overloaded keyword lists, and irrelevant themes are just part of Google’s algorithm, but it’s important to understand what they’re looking for when you do set up your account so as not to trigger any filters that may signal to them that you’re a novice with no idea what you are doing (even if that’s true!)

Google’s Account History comes into play when you set up a brand new account, as does keyword Quality Score, but account history’s an important one to understand.

When you start from scratch and create a campaign, Google knows nothing about you, or your product or service. Your account history does not exist. Nor do they know how well your ads, and offering will be received by their users.

Trust = Zero.

…and you, my friend, have to earn it!

So think about it from Google’s perspective when you’re building your initial key word list. Is what you’re about to do signaling trust? Or could it be flagged as suspect?

In short, don’t just go out and add in every single keyword you can think of, because chances are many of them will simply perform badly, and more to the point, anything that does perform sub-standard will impact on your account history and quality score, and ultimately the price you pay per click.

There’s no golden rule in how many keywords to upload at first, as every market is different, but I personally take this approach:

Firstly I do my keyword research…

Normally I’ll start with Google’s free tool to start to build out my lists. Then I may expand using a paid tool such as KeywordSpy or WordTracker.

After this I could have 10,000 or more keywords!

But… The next step is most important as I’ll then group my lists into head terms (high volume), Torso Terms (medium volume), and Tail Terms (low search volume per keyword)

What I want to do is give my new account the best possible chance of initial success, so putting in all 10,000 terms may seem like a good idea, but in reality it’ll just complicate matters and potentially raise a flag in Google’s system that could hurt your account.

What you should do is take the primary themes from the Head and Torso keyword lists and create your campaigns and AdGroups around these themes only.

Keep all your other keywords however as these are still potentially relevant, but don’t just dump them all in.

Once you begin to get traffic and build up your Account History and quality, you can them expand on the various themes that are working and slowly integrate in the long tail. Not only does this make for a well structured and tight account, it also cuts down on wasted clicks and money from day one.

Good luck and let me know if you have any questions.