Google adwords is not for small advertisers. Period. It may work fine if you spend millions of dollars or if you have so much time and experience in your hands that losing money is not a problem, but it doesn't work for the general population.
Thinking about it, with Google's push to make you add your business location to maps etc they are really starting to compete with the Yellow Pages which was/is basically 100% small to medium businesses - I guess it's a market where the combined long tail is much bigger than the big players.
I think if you're running TV ads, it's a given that you aren't a small advertiser in the sense that 'coliveira probably meant.
If you can convert a lead profitably then it makes sense to advertise in that channel.
If you spend $400 per lead and you convert 1 out of every 10 leads to a paying customer, then it costs you $4,000 to acquire that customer. If the life time value of the customer is $10,000 with a 50% profit margin ($5,000), then you just profited $1K!
PPC is really a game of arbitrage. Where it gets hazy is calculating correct LTV (considering customer turnover, referrals, etc.) and properly tracking conversions. It's not an exact science but good advertisers can get accurate enough.
For bigger advertisers these costs are insignificant in comparison to the media bill
That, and I've gotten them on the phone for support a few times already, answering random questions I have, pretty satisfactory.
Small businesses, like doctors, for example, can make a mint with AdWords. If you sell the right kind of product, it works exceedingly well even at tiny scales.