QS is a mysterious thing. Lots of variables go into it. But the main component, as far as we can tell, is your CTR. You want related keywords and matching ads together in one group, usually.

I gave an example in another thread. Say you sell widgets, but only red, blue and yellow ones. There are all widgets (all the same) except for the color. But people actually search on the color. The is obviously a simplified example. Your keywords would be "red widgets", "blue widgets" and "yellow widgets".

In that case, you wouldn't put all these keywords in the same group. You'd have 3 groups with corresponding ads because if I'm looking for a yellow widget, I don't want to see an ad for red ones.

So having all your keywords in the one group would hurt you and affect your quality score. You can go even further and create other themed-based groups. Maybe "Big Blue Widgets" or "Small Red Widgets".

However, if you sell only small yellow widgets, having "small yellow widgets" and "yellow widgets" in one ad group, with an ad "We have small yellow widgets" would probably be OK. But try to segment your keywords into different groups. It makes management a easier to have a handful of keywords in a group as opposed to hundreds and will only help your CTR and your conversions.