There are a few issues that drive up PPC costs beyond what seems profitable. Some companies value a new client based on the life cycle of the customer IE: how many purchases will the customer make over the lifetime of the relationship? While others only consider the immediate transaction.
Also, in some web driven business niches, aggregators can afford to bid much higher than individual companies because they are selling the information to more than one company (think mortgage leads).
There is also a heavy dose of the overly optimistic as well (especially in emerging markets). If the advertisers are changing on a daily basis...there may be a lot of companies just using the spray and pray method.