This is correct, your bids for a campaign will only be considered for 
display in the content network if the campaign criteria match. The vertical 
criteria should have no effect outside the Google Display Network.

Keywords are not assigned to products or services, a product or service has 
a set of keywords that are relevant, but a keyword may be relevant to more 
than one product or service at a time. The keyword tool can be used to find 
relevant keywords to your product or service. You can then do further 
research on the keywords returned to verify that they are actually going to 
create valued conversions for you. The keywords which have lower estimated 
cpc, but that you find have a strong conversion rate and contribute well to 
your quality score will get you the best ROI for your campaigns.

Basically a vertical allows you to market to a specific audience. The 
product or service helps you find ways to reach that audience without 
targeting them exclusively.

Try not to think of a product or service as being located in a specific 
vertical. There may be a vertical that seems to represent a product or 
service, but it is not that simple. A given product likely "belongs" to 
several verticals, and there are placements within each of these verticals 
that may not perform well for a specific product or service lending 
themselves to negative placements. 

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