Why does search marketing work? Seth Godin describes in his post, Permission, Junk and Spam, how marketing has changed since 1999:
The result of Google and the prevalence of search means that people are far more forgiving of things that need to be sought out, and less patient than ever with selfish marketers that insist on showing up in your face.
Search marketing works for precisely this reason, if it’s done well, of course. You audience only gets your message when they are searching for what you do, or they have a problem that you can fix.
In case you missed it, there’s a free paper on how to get the best from AdWords available here.