I always grouped keywords alphabetically but then that isn't the right approach. I usually create adgroups containing 15 keywords. My question is how do you group your keywords and is it working effectively for you ? Also any suggestions would be highly appreciated.
Use the two word litmus test and basic wysiwyg grouping naming each adgroup for the two main words in it, and the stems will follow. Then over time, the ones that are getting the most clicks and impressions break them out into their own adgroups (could be up to three words). You can never have too many adgroups.
I see what you mean but that is hard to do with thousands of keywords. Is there a tool maybe that will ease the process a little.
It's definitely easier when you do it from the start. The AdWords Editor may help your efforts. I've also heard of some others, but can't endorse any.