I've seen both sides of the story - both successful and unsuccessful. Following are some points that distinguish between the two:
1. Keyword research: understand the search volume and competition level for each target keyword before you start your campaigns. Having an estimate of CPC before you start is critical to right planning. If you operate in an industry where search volumes are less and/or competition is high, you should perhaps not depend on search engine are your primary traffic source.
2. Contextual relevancy of keywords: the more relevant the keyword is, the lesser price you pay as you drive more CTR. Google charges lower CPC for higher CTR ads. SEO directly helps SEM.
3. Catchy headlines, good description: ad making is an art. Even text ads. Test multiple copies for each keyword group and see which one does best. See if having FREE in the heading helps, try adding phone number, etc. Again higher CTR implies lower CPC.