I've been using Adwords for some time and have NEVER sold a single thing. I had some success with the Yahoo Partner Network but Adwords.....no. It occurs to me that unless you're giving something away for free its a waste of time and money.....however, I'd be happy to hear from anyone that has had success....
It seems like it all comes down to have the keywords with the least competition and the most application to your product. It seems like distinguishing by location, etc in your keyword can help. I have gotten my CPC as low as .15 with a 4% CTR.....in what is normally a competitive industry.
I have been using adwords for about 4 years and have done well. No I do not sell on the cheap, would not stay in business very long if I did. I have bids from .50 to 3.75 depending on product and competition.
Having managed dozens of client campaigns, I can categorically say that the reason it didn't work for any of them is simply a misunderstanding of how the system works. I'll be the first to admit that PPC is not easy. The search engines promote it as such: get started in five minutes, access thousands of potential clients. No wonder most PPC advertisers become delusioned when they campaign is not profitable. They quit. The odd time, they call a guy like me. I often hear "you're my last resort. If you can't make it work, that's it". For the vast majority of them, I was able to "make it work" and it turned out they started making money. I could quote you stats all day like a new client that got 4 clicks in the last six weeks, I got them 10 just the last five days. Another having a 0.4% click rate on search and a similar conversion rate, he now gets 6% after less than two weeks of work. No word on the conversions yet but I suspect it is much higher these days. Of course, PPC is not for every product. Some don't sell well online to begin with, PPC or not. Services do a lot better in general as do B2B products and services. So to answer your question, Adwords is a waste of money when you don't do things right. It can improve your profits if you do. No only my clients will tell you this but many others in this and other forums.
I agree with Lucid and like to add .. just like any business it takes knowledge, perseverance and patience to succeed. I have been doing PPC for 5yrs now and I have increased revenues year over year. Also kept up with ever changing market conditions (hint: google slaps).. like making my landing pages convert better and rank well, keeping my campaigns tightly knit etc etc.
I've had good luck marketing $97 front end offers in my niche. Month after month I make $3 for every $1 I spend not including back end or continuity. I also manage some campaigns where people are just wasting their money because even though I can get a high CTR and a low CPC their offer doesn't convert. I usually say test the offer to your list or endorsed traffic first and then whatever that does it'll convert at 50% from cold traffic on Adwords.
Adwords it's a very big game in internet marketing and some people thinks that "I know adwords I Will make money online". Adwords in not an easy thing, yeah it is simple but it is not easy. You have to spend time a lot and understand more and more. The thing is that top internet markers also learn every day, so you have to learn it from top people like Amit Meta, Mike Filesame and so on. To play game with adwords, you have spend plenty of time to play around with keywords...
What I forgot to add was that, I can only see it being profitable on expensive products. Its alright paying $3-$4 per click if you're making $300-$400 profit on each purchase. My products only make me $50 at best and the industry is swamped with competitors. I calculated that, to pay for itself, I needed 1-2% of my customers to make a purchase. In the end, only 0.25% bought anything and every one of them came from yahoo, not google. Now I'm working on another means of advertising, keeping everything offline whilst also concentrating on organic listings.
Ignore what I said about the 3-4$ per click....that too requires a 1% turnaround to be profitable.....who pays 3-4$ per click anyhow!? You get the gist of what I'm saying, I hope!!!!!