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What we have found is that careful selection of keywords using a range of sources such as Googles tools, Overture and Word tracker can pick some gaps in the market. The big hurdle of course is to know what your conversion rates are likely to be and what each sale is worth to your company. There is no point paying more to attract a new customer than they are likely to spend. The good thing about Adwords Select is that you only pay for the click through.
So assuming a conversion rate of 1% of site visitors to sales. If your keywords are costing $0.25 for each visit then it is $25 per sale in advertising costs, if it is $0.05 then it is $5 per sale. It adds up for the higher priced keywords. Our experience is that there are still large opportunities for picking winning keywords for the $0.05 - $0.10 range.
One of our campaigns has added 7000 additional click throughs to the site in 2 months, probably less than could be acheived through effective SEO, but enough to make the client happy.