WHAT FEEDBACK DOES GOOGLE GIVE TO YOU ON WHETHER YOU ARE DOING THE RIGHT THING?
Google has a Quality Score column in your Adwords account. It is not shown by default, but changing your page viewing options you can make it visible. Keywords have three different quality score ratings: Poor, OK and Great.
Poor: some variation of slap
OK: min bids of usually < $0.50
Great: may get $0.05 clicks
Its easier to get from poor to OK than it is to get from OK to great.