How effective is Google's Adwords for receiving new clients, and for generating new business?

I recently placed an ad through Google's Adwords. So far, I am not impressed. Maybe I am not investing enough money per day, or perhaps I am on the wrong site. Any good ideas about how to utilize Adwords to the fullest?

Also look at:
1) when your ads show
2) what sites your ads show on
3) what geography your ads show in
4) your placement
5) your competitors placement
6) negative keywords
7) broad vs phrase vs exact match

To find the answers you must test, test, test.