This is a question I have had about ADWORDS and OVERTURE. People generally talk about getting very targetted ADGROUPS with a small amount of keywords in each group. (Increases CTR & CONVERSION) People also say to have as many keywords as you can (Huge Lists with large amounts of Long tail keywords). This is great because it increase exposure in the SE's and Longtailed convert better. Well how do you mix the first with the second? You would end up with 10000of ADGROUPS. Or do you take your top terms and group them in small targetted groups. And then take you 1000's of longtailed and group them in very large adgroups?
I'm sure others may have different opinions, but I really don't see the need to strive for "as many keywords as possible" unless these keywords are keywords related to the conversion action you want the user to take on your site (eg, "buying" keywords, etc). Long tail keywords are great, as long as they convert, whatever a conversion is, opt-in, purchase, sign-up, download, etc...but there's no real point in paying for tons of exposure for clicks that don't convert unless you're just trying to promote brand awareness - you're just going broke quicker. Some of my most profitable sales-related adwords campaigns come from a total of maybe 150-200 keywords max. I've tested the mass long tail method and to be honest, my experiences with them haven't revealed them to be profitable in my industries, though in some other industries I'm sure they are - so I think this depends on what you're into. Anyhow, just my personal experience. -T
I think the key is to have extremely targeted adgroups for your very top terms, then blanket adgroups for terms you know don't work so well. I use a separate adgroup for my top twenty or so terms, then adgroups for other terms that can be grouped together, and finally I have one big adgroup (actually a separate campaign with one adgroup in currently) for long tail searches that I bid extremely low on.