A good strategy is to start off with exact match keywords and then, when you identify which ones convert best, turn those into broad and phrase matches. This is what I generally do and it tends out to work out the best.
Exact, Phrase, and Broad Matches
Exact match keywords means that you place your keywords in brackets [] and only people searching for that exact term will see your ad. So, if your keyword is “blue cars” then your ad will show up only when people type in “blue cars” exactly and not “buy blue cars” or “used blue cars” or even “blue car”.
Phrase matches allow you to access a wider target market. These keywords are contained in quotations “” so, continuing with our same example, “blue cars” will show your ad whenever people type in searches such as “used blue cars”, “big blue car”, “sell blue cars”. On the other hand, your ad will not show up for a search such as “blue used cars”.
Broad match terms are those without delimiters so you would simply type your term in as blue cars. If you don’t add negative keywords your ad will show up for everything from blue cars photos to a blue sedan type car that looks cool.
The Reasons Behind It
The reason you want to bid on phrase and exact match, as well as broad, is that you will gain a better understanding of the market and you will often have a higher CTR with a lower bid price. So, you should start with up to 10 exact match keywords. Some of these will generate traffic and convert while others won’t. By using exact match you will discover this with the lowest amount of risk.
Once you establish exactly which keywords are generating qualified traffic, then you can turn those keywords into broad and phrase matches. This will allow Google to automatically find similar searches that match your keyword and show your ad to those users. This approach will afford you less control but your traffic will increase over time. However, before you turn-on broad match keywords for your campaign, make sure to include a list of negative keywords as well which will give you more control over who sees your ad and who doesn’t.
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It’s all about exact match. A well built out campaign should only need broad to generate new keywords. All highly converting keywords should be deployed on exact.
Thanks for the comment Ian and I agree as well. My biggest ROI is definitely with exact match!
I used to use broad not knowing there were different selections and I always wondered why I was getting such little traffic for keywords with, supposedly, big numbers of searches. Turns out a lot of them had only 10-100 a month .. haha. I felt so stupid.
but yea, I use exact match now and I can easily see the difference in my results.
Great blog by the way Dino, just found it!
Zach
Thanks for the comment Zach! How did you find my blog?? just curious and thanks for stopping by!~
No problem man!
I found your site off “thatimthing.com” Was looking at the posts and one of them was about blogs accepting guest posts and saw your site on the top of the list. Interested in yours cause it was first.
broad is misleading….exact is the way to go
i wish i knew this when i started learnign about this stuff 
Wow, nicely put. I was just looking for some articles about PPC and stumbled here. I’m glad I found it because I probably would have started with broad match and wasted a lot of money!
I think the advantages of the exact match option are a little obvious in terms of conversion rate potential. The user-searcher is very much aware what he or she is looking for. So they type in a specific keyword or phrase. What would come out then would be very relevant search results.
Jemima of http://www.spurpress.com