(YOUR AD)
[blue widget]
"blue widget"
blue widget
Or, do you create 3 ad groups for 3 for different matching options like these:
(YOUR AD)
[blue widget]
(YOUR AD)
"blue widget"
(YOUR AD)
blue widget
Is there an important difference between these 2 options? What are the advantages or disadvantages of both systems in your experience?
I discussed using the first option for our account with our adwords rep, and he told that using different match types for same keyword is self defeating and would bring down the CTR and Quality score
That sounds like the opinion of an individual who has never managed their own campaign nor been responsible for managing within tight ROI constraints.
To add to Rhinofish's statement that "there isn't a single answer for any advertiser" (which I agree with wholeheartedly), it also depends on the keywords being discussed.
For long-tail keywords with limited volume and, perhaps, only faint distinctions across queries, where the value associated with customized ad copy or unique bid is limited - then, yes, it probably doesn't make sense to expand such keywords across all match types. But, for high-volume keywords where nuances in each query can dramatically change the the value of each visit (or, can skew the marketing messaging needs) - there's no compelling reason why these differences shouldn't be exploited.
In January 08, Google stated that displayed quality score is only based off the exact match variation of the keyword.
This means that the QS is based on the exact term typed in regardless of the match type that shows it.
So having the broad, phrase, and exact match in same group won't affect the QS. You can put them in separate ad groups but it is unnecessary work.