We are launching a site for the local retail arena. Our deals will earn about ten dollars in income. How should we approach SEM marketing and what packages would you suggest to track our marketing spend.
If you do it yourself, you will find that spending some "trial and error" time can be helpful. Try to locate keywords that have low competition for cheaper traffic. Pay close attention to your metrics regarding who clicks, and who actually completes your call to action. When you start seeing patterns adjust your bidding strategy to amplify the results. One last thing, experimenting with your advertisements language and design can make huge differences in CTR. There is a ton of good information out there to research. That, along with some trial and error testing will work quite well.
For an autopilot solution, I have heard great things about Vurve.
Google Analytics is the obvious for tracking, it's free, does everything you need and integrates nicely with Adwords, Adcenter etc.
Take some time to get it setup with goal tracking, funnel visualization and ecommerce integration. You can often find coupons for $75-$100 in free clicks from Adwords for new advertisers, that should give you enough traffic to find keywords that convert.
In terms of finding the right keywords there are boatloads of keyword research tools out there pick 2 or 3 that you're the most comfortable with and go to town on research.
There are two mistakes that I see just about everyone that is new to PPC make:
They pick the keywords with the highest volume. Obviously you want keywords with some volume but when you're paying on a per click basis the keyword that generates 10 clicks and converts at 20% is superior to the keyword that generates 100 clicks and converts at 2%.
They ignore negative keywords. Negative keywords allow you to target things even further and eliminate a lot of costly and irrelevant clicks.
I would consider using a trial run of a PPC management solution. Sitewit has a free trial run and is pretty good for helping you optimize campaigns.