How are Negative Keywords used?
Negative keywords play a critical role in both your PPC campaign creation (lead customer traffic to your respective Broad & Exact Ad Groups), and your campaign optimization efforts (exclude unwanted customer search terms from your running campaigns.)
How do I use negative keywords to control customer traffic?
The goal of your Exact Ad Group is to maximize sales; you will bid the most on your Exact keywords, as these are the keywords that convert for you. Consequently you will NOT want to bid on these keywords in your other Ad Groups, since you are already bidding aggressively on them in Exact.
The goal of your Broad Ad Group is to let Amazon match new search terms to the keywords running in Broad, and help you identify new keywords you will want to add to Exact.
The purpose of your Automatic Campaign is for keyword research; your goal is to let Amazon continually match new customer search terms to your ads. However you also do not want to bid on the same keywords in Auto that are already running in your Broad Ad Group. Consequently you will also add your Broad keywords to ‘Negative Phrase’ to your Automatic Campaign.
(If you simply add your Broad keywords to ‘Negative Exact’, you will only exclude the Broad keywords, and not the search terms generated by each Broad keyword.)