What role does the Detination URL play in the keyword settings? I have been leaving mine blank and do not notice any ill effects? Could this hurt my campaign in any way?
No. it doesn't... directly, but you can use a few tricks to cut your costs by using PHP code and tracking and stuff like that... alright? There's no effect unless you want to do "more than others do". - Chris
setting keyword destination URLs has many advantages, especially for tracking individual keyword performances.
I do use some keyword tracking in my destination URL, ultimately you need to test and determine the ROI.
Leaving the destination URL blank on the keyword level won't hurt you. But it can be helpful to use this feature in some cases.
Agreed. And it wouldn't negatively effect your campaign unless there is a landing page in your site that would be more appropriate for your keywords to direct to.
FYI, I noticed substantially lower CPC once I began targeting the individual keywords to individual pages on my sites. If you are forwarding to third party this method won't really help you, unless they allow deep linking.
There is no clear documentation available on this, but I think having a keyword in the destination improves the Quality Score. Though I am not sure about the same.
What if you are split testing 2 ads with different landing pages? Wouldn't the keyword destination URL only be sending visitors to 1 URL?
Adwords looks at keyword density (they call it relevance) on your landing page. The minimum bid for you is determined from several factors, of which this is one. If you want to lower your minimum CPC bid then you should make sure that your keywords, or close variants, appear on the landing page, assuming that you own the landing page. If it someone else's page that you are linkined directly to (i.e. a Clickbank hop, etc.) then you should tailor your keywords to the phrases found on that page. There are several tools out there which will analyze the landing page and identify the most dense keywords present. Some are even free (Think Firefox toolbars....) Good Luck!
Use Google's Keyword tool - put the webpage address into the box and see what it brings back. This is what Google thinks, are relevant words/phrases for your site. Surely, it's the best starting place.