This is special news. This is news that makes us rejoice. I wouldn't be misleading you too far if I told you that there is a party going on in the office about this news.
What's so good?
AdWords has introduced the ability to tag any campaign, ad group, ad or keyword with a label. This is a feature we've been wanting in AdWords for quite some time, for one reason: you can filter on it.
By having a "tag" that goes with each item but doesn't affect the item in any way, you can create custom filters to quickly and easily navigate to groupings that don't match up to your account structure.
Imagine that you have your campaigns split up by geographical targeting, but within those campaigns are three different products. You might want to see your overall performance split by product. Previously this was tricky to achieve and required massive amounts of effort devoted to naming conventions to be able to filter correctly.
Now you can simply apply "Product 1", "Product 2" and "Product 3" labels to each ad group, ad and keyword in those sections. Hey presto you can immediately filter for each of those separately, and view them in the dimensions tab.
Source: Inside AdWords blog
At the moment there is no word on whether we'll be able to have more than one label per item. We'll update as soon as we know.
There is also no ability to apply a label to more items than fit on one page in the interface. That's a 500 item limit.
For a large account where this would be most useful, 500 is woefully too small.
We need to wait for AdWords Editor and the API to update to include this feature to let us easily mass update entire swathes of keywords all at once.
This is a great new tool, that at the moment is too limited to be broadly useful. Once this is more mature, it should become a best practice for all campaigns to use labels for reporting structure, and focus on campaign splits purely for settings/targeting reasons.