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Should I bid on these keywords too (thus heavily competing against other companies), or should I bid on them but target to be #4 or #5 for the ads, or should I ignore them completely?
One other comment on this: I have seen people do these types of tests in the past and find what they *think* is a positive ROI from their PPC campaign. However, they had ignored the cost of cannibalization of the 'free' traffic. Depending on the keywords and industry, the cannibalization of traffic from the natural listing is going to vary - but just be sure to evaluate the effect the campaign has on overall ROI and do not evaluate the natural or PPC traffic in isolation.