I'm not qualified to answer your main point, but I can tell you that a good next-step for an unsuccessful adwords campaign is to use disqualification marketing

I'm not qualified to answer your main point, but I can tell you that a good next-step for an unsuccessful adwords campaign is to use disqualification marketing - if you haven't already. In its most common form, it's basically listing, in the ad itself, as many of the things that are stopping people buying as you can. For example, if price was the sticking point, the common approach would be to hide the price while you sell the product so as not to scare people off while you're winning them over. The disqualification marketing technique would be to put that scary price right in the ad text, the idea being that those who click are not going to be scared off by the price, as they already know it. This can do wonders in effectively multiplying your adwords spending - all those people who were never going to buy at that price stop using up your ad budget, leaving you more ad clicks for those who might buy despite the price.