From a single keyword, its very easy to generate an incredibly long list of keywords… synonyms, plurals, misspellings, broad matches, phrase matches, exact matches, etc. Keep in mind the costs associated to managing so much data. When the data becomes spread over so many keywords, it becomes difficult to analyze and interpret… which keywords are working, which ones aren’t, which one have a max cpc that needs to be adjusted, etc.

I was once analyzing keywords that generated thousands of dollars of clicks over several months that didn’t lead to a single sale. At first glance, I was shocked… but then I realized that the ads would have showed up for those keywords even if I hadn’t been bidding on them because I was bidding on the broad match version of the keyword at a slightly lower price (which keyword wasn’t doing bad). Moral of the story… long lists of keywords are just spreading the data thin (impressions, clicks, ctr’s, conversions, etc) making them difficult to manage.

On the flip side, Google doesn’t always show ads for synonyms and misspellings so make sure you do include them.