Yeah. I think, in fact, it's overvalued by the market right now. Many people are bidding for ad words as if the google adword is what brought you the customer.
The thing is, at least in my case, this simply isn't true. Nobody buys a VPS on the first click; if someone clicks through a google ad for my company, yeah, google should get some credit, but most of the credit should go to the blog the customer saw a month ago.
That's the thing; because the adwords are the first hits and are super convenient for the customer, they pick up a lot of people that would have clicked on the organic result.
Now, this is okay if they are taking a very small cut, but the way many people use google adwords? the price is bid up to a very large cut of the profit you are going to earn from that customer. I mean, yeah, sure, if google really is bringing me brand new customers that had never heard of me; people I would not otherwise have a chance with, yeah, I can see paying 90% of the profit. But if google is bringing me customers that were very likely to come to me anyhow? eh, I'm not going to want to pay google nearly that much.
I think this is also why facebook is so highly valued; people believe that facebook has enough tracking data to see that blog that my customer read last week that actually caused the customer to sign up through the adword this week. And maybe they do... but it's a dang difficult problem, and I haven't seen facebook make much progress. Even then, they are going to have a hard time integrating the people that heard of me because of the checkout-line advertisements I bought in Mountain View Safeways.
(because of this, my advertising dollars go into cost per impression advertising, rather than cost per click.)