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You are not supposed to drop it anywhere, but to drag it all the way to the clip in the timeline.
Or select clip in timeline and double-click on Ultra Key in the Effects panel.
Next time when you open Premiere hit the LEARN tab in the left top corner first.
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BTW - the ultrakey effect in PP is pretty basic and only works well on decent quality source material. For advanced chromakey, I suggest using Keylight in After Effects.