[txxxxd]

It sounds like you're not very familiar with the industry.

One of the reasons Google's advertising programs are so successful is that they are measurable. A site can compute return on investment and know that for every $X spent on Google ad clicks they are generating $Y in sales.

[mtts]

I'd love to hear some figures on that, because the ones I've seen from various (large) online retailers were abysmal. Setting up adwords campaigns for these retailers was a fun diversion, in some cases also a good excuse to huff and puff about the future of online marketing, but not at all a significant source of revenue. It was done mostly "to keep an online presence", probably out of fear that if they didn't buy those adwords someone else would.

The retailers I'm talking about may not be representative, however: they already had a strong market presence and strong brand recognition before they went online. Maybe there are businesses that have started from scratch online that did see significant revenue from adwords, but I doubt it.

[jdietrich]

The more niche you are, the more effective Adwords will be. High volume/low margin rarely makes sense on Adwords, because you'll face death by a thousand cuts by people who can target better, make bigger margins, bid higher and get better QS.

For businesses that can best exploit Adwords targeting, it can be breathtakingly effective. I've dealt with specialist contractors who saw 25000% ROI on their Adwords spend. Search terms like "loan consolidation" and "car insurance" cost tens of dollars per click and are absolutely worth that much.