What are your AdWords Ratios?
vampirical: CTR: 1.5% including content network (2.5% search only)
I'm being a bit cheap recently and staying around 3rd or 4th position (avg CPC $0.30-$0.60).With adwords I focus on ad quality and click through rate over all else, the better you perform the more you are rewarded. Make sure you have enough impressions with well targeted keywords first and then over time adjust ads and phase out keywords based on performance.Avoid tossing in the kitchen sink of keywords, do your research and make your list of keywords, focus a bit on the top and bit on the long tail (oh so much cheaper).