Well, you want a "cost effective" compaign so cost is the other most important factor. You need to fine tune your keywords according to their cost, and then go for those that won't break the bank.
A keywords like "hosting" is going for over $5 for the top spot on Google Adwords. It's too generic and too expensive. You want something more targeted, like "uk dedicated hosting" or "london dedicated hosting". These keywords will probably be still too expensive for your budget, but you can still lower your bid and pull in targeted visitors.
Forget about top spot, all you need is to be listed on the first page (top 5 or 6). Your ad will still visible to most search engine users and you don't have to bid over-budget just to compete for that top spot.
There are other factors involved, like Ad copy and landing page. For these, you need to implement a good ad tracking script to fine-tune your ads even further to keep only those that result in higher visitor click ratios, and a higher ROI (return on investment).
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