Over in PPC Discussions an interesting question regarding dynamic keyword insertion (DKI) was posed:

“What I want to know is this - since having the search term in your advert improves its relevance (particularly in the headline), does DKI ensure a very relevant advert, or the opposite (does Google penalise you or reward you for using DKI to put the search term in, rather than writing a genuinely relevant advert)?”

Good question. There are two topics to touch upon here: dynamic keyword insertion (DKI) and quality score (QS). DKI within your ad does not directly affect your QS (positively or negatively). Your QS is determined by the relevancy of your ad text, keyword, and even ad group, to the user. This relevancy is derived from your ad’s click-through-rate (CTR). As long as you are improving your CTR, you are improving your QS. If DKI does this, then keep doing it!

However, here’s a rule of thumb (and I called Google to confirm my suspicion): if your ad group is set up so that it contains related keywords you, should be able to compose relevant ad texts that do not need to utilize DKI. If you find yourself having to use DKI in order to get every keyword in your ad group within your ad text, then you may have too many keywords in your ad group. Google rewards specificity and relevancy within ad texts with a higher QS. Perhaps you could take that one ad group, find themes among the keywords, and break it down into two or three ad groups? Then you wouldn’t need DKI. And if you wanted to, you could run A/B testing within each of these ad groups to see if DKI actually does increase your CTR. It’s an idea.