hi, it's been awhile but i remember back when if you found a niche website you thought fit your business, you could specifically get your adwords (links/banner) to show up on that particular website. is that still possible? or did they remove that function? this also meant that the adsense publisher received a bigger chunk of the pie....if i remmebered correctly.
You still can - they call it 'placements' now. Click 'New online campaign' - and then click 'Start with placements' from the drop down menu.
It's called "Placement Targeting". For more info, please visit http://adwords.google.com/support/bin/topic.py?topic=342
With placment targeting, you can use your image ads to run over different popular websites but make sure you bid high in the starting. If your image ad is catchy, you can get some good conversion from these placment targeted campaigns.
In the placement section you add a specific site as well as others that might also match your needs. However pay special attention to the traffic on that site, your add may not get a lot of views. Conversely, if you have place your ad on a site that has a high level of traffice, i.e. MySpace or Youtube, you can burn through your budget very quickly. Good Luck!