Negative keywords are essential to properly targeting your ads; however, they can sometimes block positive keywords OTHER THAN the actual negative keyword you're using.

Since this behavior is not usually predictable nor obvious I thought I would share this information with other Google AdWords users. Whenever you're adding negative or embedded negative keywords wait a while and then come back and point at the magnifying glass icons to use the Ad Diagnostic Tool to make sure your new negative keywords are not blocking your positive keyword phrases.

If you find phrases that indicate that negative keywords ARE blocking them, first check for any of the words in that phrase in either that ad group or at the campaign level. If you're positive you haven't accidentally added any of your positive keywords as negatives now you've got the challenge of figuring out what words Google's system has equated with each other.

First think of anything obvious and don't expect consistency. For example:

-car might block -auto but not automobile
-holder might block -frame but not frames

You would think that if a negative keyword were blocking your positive keywords those keywords would NEVER have impressions at all. For broad matched keywords that can be untrue - so even if you see some impressions you may be missing most of your traffic until you delete the conflicting keywords.

If traffic suddenly drops on keywords that have always run fine Google may have recently equated a word you've been blocking with a word that was active. Be sure to check your keyword status when diagnosing drops in traffic.