I had question from one of my customers regarding the keyword level destination url. It seems there some confusion between the adgroup level destination url and the keyword level one. Below is my reply.

There are two kinds of campaigns you can generate with the campaign creator. One, the recommended way of one adgroup per keyword, which results in multiple adgroups. Two, a campaign with a single adgroup and each keyword in the adgroup has a keyword-level destination url. If you "switch to advanced mode" you get the choice to generate multiple adgroups or a single adgroup in the dropdown labelled "AdGroup".

Now, a keyword-level destination is a url attached to the keyword. If you are familiar with adwords, you know you use syntax like this...

   Keyword ** Max CPC ** Destination URL

This provides a keyword-level CPC and Destination url. Thus you can have single adgroup with multiple keywords and multiple destination urls.

A regular destination url is at the adgroup level, and applies to all keywords.

You must have a destination url, in one form or another.

The error message "No need to apply destination url to keyword if generating multiple ad groups." means you have the "Adgroup" dropdown set at "multiple" and you've checked the "Keyword dest. url". What you are saying is generate mutlkiple adgroups with one keyword per adgroup, but then give that one keyword a keyword-level destination url. The system is preventing you from doing that. The only way you'd ever want to check the "Keyword dest. url" checkbox is if you set the "adgroup" dropdown to "single".