Google AdWords Dynamic Keyword Insertion : SEO Book.com

This little tip (Thanks SEOBook.com) happens to be one of the easiest ways to improve the performance of your adwords ads. It's not very well known because Google doesn't actually explain it anywhere. It's just one of those cool little tricks that they like to let people figure out on their own.

Here is the basic form: {KeyWord:Your Title Here}

A few notes:

By capitalizing the 'K' and 'W' you define the capitalization of your title (so if you use all lowercase your title will be all lower case).

'Your Title Here' is necessary as a backup for when people enter search queries that are too long to make a title of (the normal limit is 25 characters so your backup title can't be longer than that).

Finally, the titles generated are based on the keywords in your adgroup. Make sure your keywords are in the most commonly used order, etc., or your ads may end up looking rather odd. (i.e. I enter 'huge fat whale' and your ad says 'huge whale fat' and I think, "duh, that's not right".)

More here:
Google AdWords Dynamic Keyword Insertion : SEO Book.com