In yesterday's post, I wrote about how you can create profitable campaigns with high CPCs. David Wallace wrote a pertinent post over at Search Engine Guide about the difficulty faced by small businesses to keep their Google AdWords costs down.
Ultimately, after much trial and error, he lowered the costs and focused more on long tail keywords. The end result was that the traffic doubled and the average CPC was cut in half. He ends his article with the following very important note:
If you are finding it to expensive to compete for that highly competitive keyword phrase or phrases, try cutting back on the maximum you are willing to spend for click-thrus and concentrate your efforts on "longer tail" or less competitive keywords. The results may astonish you.
I've seen this as well, and it's very cool to play around and be patient as you experiment to achieve desired results.
Forum discussion continues at Sphinn.