Why does the traffic estimator give such wildly erratic results? e.g. we raise the maximum CPC and get a lower traffic estimate.
When I need to, a combination of tools and research. Really depends on the project at hand. Honestly though, I haven't had to estimate traffic to any degree of accuracy for anyone in a long time. I've found that people care about results, estimates don't do jack for the bottom line.
Traffic estimation is really hard in my opinion because noone will give your proper data. To find out yourself through data mining is expensive if you start with a project from scratch.
Traffic might be real, however the cost per click might be totally wrong. In addition the traffic estimator does not show keywords which are prohibited for advertising, or protected by brand trademark, or etc.