One of the BEST techniques for creating really targeted campaigns is to use Dynamic Keyword Insertion. Here's a video I created which explains this sometimes confusing topic. http://ppckeywordtoolz.com/videos/dki/dki.html if you are new to PPC and creating AdWords Campaigns, check out this video which shows you step by step how to create AdWords campaigns the correct way that will give you very cheap CPC! http://ppckeywordtoolz.com/videos/camp/v32.html DZ
I've found wildcard keyword use may give you good cost per click but it doesn't generally delivery good cost per action.
I agree w/ the last poster. Using dynamic keywords will most always improve your CTR, but doesn't always improve your conversions. Test it out and some keywords might not be best suited for dynamic insertion.
I respectfully disagree with this post, as dynamic keyword insertion most often results in the worst performing ads. They look generic because all of the advertisers are bidding the same, and the ads all look identical. Best to differentiate your ads. Other issue is misspelling. Do you want a misspelled word thrown into your ad?
row 1 brings up a great point re. miss-spelt words. personally i have found my CTR to go up on all my campaigns - that's why i use this technique and teach it in my video tutorials: http://ppckeywordtoolz.com/videos/camp/v32.html and here: Using DKI in your Ads: http://ppckeywordtoolz.com/videos/dki/dki.html