A few thoughts... First, there is a 20k adgroup limit per campaign.
Second, going in you should assume that 80% of your long tail keywords will not get any impressions.

That being said, this is a common strategy with several different ways to execute on it...

1. The rule of thumb when building out campaigns is being mindful of how you will optimize and manage it. I like to ask myself...Will my ad copy or settings change if I separate these keywords into new adgtoups? If not, group them together(unless you can't on the build out).

2. Become intimately familiar with filters, segments, columns, labels, and dimensions or else managing it can become impossible.

3. There are two common strategies that people use similar to this... One is putting all matchtypes in 3 dif. Adgroups and negated out the other matchtypes... The other strategy is starting a beta campaign with only broad modifier and when you find converting queries in your search term report you move this over to an alpha campaign with higher bids.

Putting both together in the same ad group would be pointless.

As for the effectiveness of using any of these strategies it would really depend on the effort involved in building out and managing it and on how crucial it is you don't miss out on any queries...

I would be happy to explore your specific situation if you call me.

In our experience, we've tried the super-targeted approach.

What we found, even 3-4 years ago is that it became alot harder to do bid optimization when it was to segmented.

Even in super-competitive verticals (e.g. mortgage/finance leads, florists etc.), where there's reason to break things down to the long tail, it's made alot more sense to use Google's keyword tool to remove the keywords that have no volume.

Keep in mind, that in the past 6 months, exact match is becoming obsolete, as Google automatically includes related keywords.

So don't obssess as much on the "long tail keywords", and focus more on your ad copy messaging, positioning (what percentage of the time you are on top), and landing page conversion rate, and this will give you a much higher conversion rate.

- David

You actually can't do it because limit of ad groups per campaign is 20k. But in general, I also practice this approach with up to 10 keywords per ad group and for the successful ones even one keyword per ad group.
One of the pros are more focused ads for each of the keywords, providing better targeting. Cons are of course headache with managing that much ad groups and problems with quality rank within a campaign. And yes, of course you would need to set negatives for each of them against all the other ones.
Bids and budget are not a universal rule; they depend on the industry, targeted country, etc.

For a follow up and more detailed analysis, feel free to schedule a consultation.