mademetop - 6:43 am on Mar 31, 2011 (gmt 0)

I think it really depends on your market. Look at the economics. If you are an insurance company making (for example) $10K GP for each policy signed and you get a 1 in 100 conversion ration - then you can work out that you could spend $10 per click and still wing up with a mammoth profit. However, if you were an affiliate and only got $1K for each policy signed then you probably could not justify using PPC for high value keywords - however you may be able to find long-tail keywords which were only $1 per click - and, provided you were working on the same conversion ratios, would make the same % margin as the main company.

So, in answer to your overall question - is PPC cost effective - for many companies it is not only highly effective but can be a mammoth generator of revenue and profits.

However, in certain markets that are competitive and where margins are squeezed - it may not work - unless you can find keywords that come within your budget.

If my margins were so tight - I'd look for another affiliate opportunity. But that's just me :)