Google AdWords started out to be very resonable to everyone.
Now they have raised their rates to where most people on the internet can't afford it. It's too bad that they could help so many people with one of the best ways to advertise on the internet, and now it seems all they care about is making as much money as they can in the shortest amount of time. They are in the same catigory as the oil cortel & major oil companies. I will not use AdWords again until they come back to reality!
I am struggling with the exact same problem. I am making money with it but just barely. I have not found a great replacement; however, the following are a couple of good ways to get cheap or free traffic, but they are not passive like Adwords:
1) Writing a press release. PRFree is free and some of the other are as well. PRWeb costs $80 but they blast your release everywhere and you get a ton of traffic and I did get a fair amount of sales. Also, when people pick up your release you suddenly get a tons of links which puts you higher in the natural listings and then you can get traffic that way.
2) Writing articles and posting them in ezine directories such as ezinearticles.com. You put your link in your bio and people read it and you get a lot of links when other sites pick it up.
3) Ebay. You can sell your product or offer a cheap report that gives some information and tells about your product.
Good luck, I wish I knew more.